Bitter truth about banking resonates

Some bitter truth about the country's banking sector resonated through the Bangladesh Institute of Bank Management (BIBM) auditorium when a noted economist and former director of UN International Fund for Agricultural Development (IFAD), Dr. Mohiuddin Alamgir, delivered the 15th Nurul Momen Memorial Lecture on 'Ethics in Banking' in the evening of Sunday last.
Following are a few quotes from the lecture that in all likelihood have not been relished either by the ruling quarters or by the sponsors/ directors of private banks.
"People in the ruling quarters dominate the state-owned banks and the rich elites, the private banks. Crimes are committed through forgeries in both the cases."
"The private banks take secret route to issue loans to near ones (of sponsors/ directors) and parties of their choice."
"The public banks do so under political pressure or wilful malpractice, misappropriation, misrepresentation, money laundering, irregularities, falsification of documents, violation of credit limits and so on." 
In his lecture, Dr. Alamgir had repeatedly laid emphasis on two particular issues - 'minimisation' of political interference and 'ethical banking'. In the Bangladesh context, political interference has a strong bearing on the ethical banking.
The present state of the public sector banks is a testimony to how damaging the malice, called 'political interference', is to financial institutions.
These banks, which are victims of such interference, are eagerly awaiting capital infusion from the public exchequer. A couple of them would have collapsed a long ago, had not the government been generous enough to pump taxpayers' money to replenish their capital base.
The private sector banking is also not immune to interference by the ruling political quarters. The birth of banks and selection of their sponsors, as the public perception remains, are very often determined by political choice. Such sponsors are found to be eager to demonstrate their loyalty to their 'political masters'. Others of different hues do not have any other option but also to feign their loyalty.
Dr. Alamgir, while highlighting the need for ensuring ethical banking, maintained that it could only be managed by people with 'good moral character' as foundation of ethical banking is people. "Ethics in banking is about trust between banks and clients", he said.
So, according to Dr. Alamgir who was the president of Bangladesh Economic Association (BEA) in the early years of the country's post- Independence period, the people including sponsors/ directors, officials and employees of banks need to be men of character to ensure 'ethical banking'.
Politics has nothing to do with a man being good or bad. It is altogether a different issue. But, taking advantage of political connections, men with questionable track record do often enter with ill-motive the arenas that would have been rather safe without them.
When there is politics there will be politicisation. It is a natural process. But inappropriate use of politics or political interference, known popularly as politicisation, has been producing all the troubles. Thus, the word, politics, has earned a bad meaning at the people's level.  
Dr. Alamgir has suggested one way of reducing the intensity of political interference in the country's banking sector. In fact, if his suggestion --strengthening of the Bangladesh Bank (BB), Anti-Corruption Commission (ACC) and Office of the Comptroller and Auditor General (CAG) -- is acted upon, it would not only help the banking sector but also save many other sectors and systems that are on the verge of collapse.
Looking at the country's banking sector in isolation would not help. It is very much linked to the developments taking place in other sectors of national life. The ills that are witnessed in the banking sector have emerged mainly from mal-governance. One has to look into internal governance of the banks, effectiveness of supervision and monitoring by the central bank - the watchdog in the financial sector - over the banks and financial institutions and the eagerness on the part of the government to help improve the quality of governance in all spheres of national life.
Undeniably, the country's economic performance has been impressive for the last two and a half decades. In recent years, the performance has been even better barring a few exceptions.
But as far as the quality of overall governance and that of services that are delivered by most national institutions and key regulators are concerned, the people have enough reasons to be greatly dissatisfied.   
Sadly enough, there has been no attempt at the national level to improve the quality despite the people's strong longing for it. So, it will not be feasible to expect improvement anytime soon either in overall governance or the performance of the key institutions as mentioned by Dr. Alamgir.
Sounds too pessimistic? But is there any reason to be optimistic?
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