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Govt to gauge feats of bank bosses

BB preparing indicators for assessment

SYFUL ISLAM | March 19, 2020 00:00:00

With the financial health of publicly-owned banks deteriorating, the government has moved to evaluate the performance of chief executive officers, or CEOs, officials say.

In a recent meeting, the financial institutions division decided to set the key performance indicator for the CEOs of state-owned commercial banks so that their activities can be assessed.

The targets will be set against each of the indicators and the central bank has been given seven working days to accomplish the work.

The Bangladesh Bank has been asked to set a percentage-based common target for CEOs instead of counting those mathematically.

A senior division official said each year, the state banks sign the annual performance agreement with the government and their achievements are evaluated.

But the CEOs have no separate performance evaluation criteria, thus they are not personally assessed, he said.

The official said the CEOs are appointed on a contractual basis and setting up the KPI will help improve their performance.

Deputy general manager of the central bank Mutasim Billah told the FE on Tuesday he will soon send a draft KPI to the division for finalisation.

"Actually, the performance of a bank depends on the sincerity of a CEO. The bank's performance itself is his or her performance. If KPI is set, they will work more rigorously," he said. Managing director and CEO of Rupali Bank Obayed Ullah Al Masud termed the initiative a good one for improving a bank's state of affairs.

"If the KPI is in place, a CEO can evaluate his performance by himself alongside the government," he told the FE on Tuesday.

Mr Masud said when KPI is set, some key areas like deposit mobilisation, disbursement of quality loan, non-performing loans and the fundamentals can be assessed.

He welcomed the move, saying, "Through the KPI, the ministry can get a structure to evaluate the performance of the CEO."

Managing director of Bangladesh Krishi Bank, or BKB, Ali Hossain Prodhania said the specialised banks every year sign annual performance agreement with the government, but there is no KPI for top executives.

"Whenever the key performance indicators are measured by a regulator or an owner and a feedback is given quarterly or monthly, there must be a positive impact," he said.

"A follow up is well for all," he added.

Economists had long been advocating the assessment of the top executives.

They demanded that the CEO should be held responsible for the rising non performing loans in public banks and their remuneration should be tagged with their performance. However, until now no such measures were taken.

Former economic adviser of a caretaker government Dr A B Mirza Azizul Islam said there should be some objective criteria for evaluating the performance of CEOs.

In case of Rupali Bank, he said, the share prices can be an indicator since it is listed in the share market.

For other banks, the volume of soured loans, recovery trend, and steps taken to recover the NPLs can be added as indicators, Mr Islam said. "Overall good governance and the implementation of corporate governance can be included in the KPI of the CEOs," he added.

Mr Islam also said alongside the preparation of KPI, the regulator needs to ensure proper monitoring and the actions to be taken for failing to achieve the targets.


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