Bank's interest income growth
Tuesday, 9 February 2010
THERE is a substantial difference between the interest income growth of private- and state-owned banks. The reason may be difference in the interest on deposits, and other term instruments of savings as well as the interest charged on overdrafts, and other banking related charges levied on loans, by the different types of banks (public, private and foreign). Additionally, the volume of non-performing and bad debts, and the type of management practiced by the different types of banks also impact on income growth.
I believe, that there is not much difference among the professionals who run the banks; be it state-owned or private. Also I am not sure whether there is any real difference between the "quality of services" offered by different bank types. The term is rather broad and open-ended, to be a reasonable and objective criteria of judgment.
The real reason could be, the board of directors that sets the banks policies and modality of operation. With many political appointees in the state-owned bank board of directors; there is a tendency to bend rules for short- and long-term debt management criteria. Public sector banks are often forced to accept non-performing credit lines; at the direction of their board, whose members with political clout, can demonstrate more authority, overshadowing financial analysis and responsibility in a subjective, and not objective manner.
More often than not, state-owned banks are saddled with such non-performing portfolios by their influential directors with political support; having no financial stake in the bank. Quite often, it is the result of such political pressures that stagnate state-owned banks.
More opinion on this matter from readers may help us identify the overlying issues more objectively.
S. A. Mansoor
Dhaka.
I believe, that there is not much difference among the professionals who run the banks; be it state-owned or private. Also I am not sure whether there is any real difference between the "quality of services" offered by different bank types. The term is rather broad and open-ended, to be a reasonable and objective criteria of judgment.
The real reason could be, the board of directors that sets the banks policies and modality of operation. With many political appointees in the state-owned bank board of directors; there is a tendency to bend rules for short- and long-term debt management criteria. Public sector banks are often forced to accept non-performing credit lines; at the direction of their board, whose members with political clout, can demonstrate more authority, overshadowing financial analysis and responsibility in a subjective, and not objective manner.
More often than not, state-owned banks are saddled with such non-performing portfolios by their influential directors with political support; having no financial stake in the bank. Quite often, it is the result of such political pressures that stagnate state-owned banks.
More opinion on this matter from readers may help us identify the overlying issues more objectively.
S. A. Mansoor
Dhaka.