Blaming the banker
Monday, 1 October 2007
Mahbubul Haque Chowdhury
UNLIKE other business, the banking is also a business. The bank deals in credit and is committed to the depositors for safe-keeping of their money. The bankers are also accountable to the depositors, shareholders, general public, government and also to the board of directors. The central bank, the National Board of Revenue (NBR) under the ministry of finance and other ministries like those of commerce, industry and agriculture frame policies to implement various economic polices of the government. Banks alone can not draw programme of other own. They have got a lot of responsibilities on their shoulders. The first responsibility is to keep the deposited money readily available to return it back with profit to the depositors as and when demanded. The second responsibility is to use the deposited money on selective basis so as to get back the same within the specialised period.
The businessmen are well aware about the activities of a bank. But unfortunately some of them think that banks, particularly those in the public sector, hold the government money and they can lend out the same without making any delay and thought. Of course, the banks also hold some public deposits but those deposits are also withdrawable at any time. The banks can also take loans from the central bank and the money market at a cheaper rate and can lend out the same at a higher rate.
The bankers always get pressure from the govt. and the general public to make credit available without any hassle. Our experience shows our repayment habit is very shy. The money taken from banks and financial institutions do not come back regularly in accordance with the schedule for repayments there of. Only a few borrowers keep a good track report, but many borrowers still tend to consider that they do not need to repay. As a result, the non-performing asset of a bank goes up. In the process, banks become vulnerable both at home and abroad. Despite many reformative measures taken over the years, the banks could not yet show much commendable progress in their recovery programme. They have been taken recourse to rescheduling the loan accounts of their borrowers to keep the loan account alive and to show good earning.
If the system of actual cash and transfer earning during any year under report is practised while calculating the profit, then very few banks will be able to earn profit. Due to illegal transfer of money and remittance, the most of the banks have enforced anti-money laundering policies. As a result, right from opening of letters of credits(LCs) to keeping deposits of money or sending of remittance, the concerned person is being questioned about the money if the size thereof is big. Not only that. The Know-your-client(KYC) system has also put the new comers in a lot of trouble which is encouraging them to blame the banks and discouraging account opening.
It is easy to blame any bank but we need to appreciate the circumstances as to why the banker is reluctant to lend. Despite so many precautions taken, the bankers fail to get back the money. If a big chunk of good money remains locked up, how can a bank run? Amusingly, the non-recovery of loan is hardly discussed. Borrowers say that they have created employment for many unemployed people. But employment creation is not the function of banks and the bankers are not to be expected to consider this. The recent anti-corruption has shown how the politicians, across the divide, have been polluted by the vested interests. It is now stated that because of the arrests of some corruption suspects among the businessmen, many industries are retrenching the employees and the money taken from the banks as loans are at stake. However, those who have taken loans from banks and have not repaid the same are the defaulting borrowers and they are no less responsible for the irregularities that pervade our socio-economic life. But no action has yet been firmly taken against such defaulting borrowers, except some civil suits initiated by the banks. It is thus still to be spelt out to the public whether plundering of depositors' money is a publishable corruption or not.
(The writer is a former General Manager of Agrani/ Sonali Bank)
UNLIKE other business, the banking is also a business. The bank deals in credit and is committed to the depositors for safe-keeping of their money. The bankers are also accountable to the depositors, shareholders, general public, government and also to the board of directors. The central bank, the National Board of Revenue (NBR) under the ministry of finance and other ministries like those of commerce, industry and agriculture frame policies to implement various economic polices of the government. Banks alone can not draw programme of other own. They have got a lot of responsibilities on their shoulders. The first responsibility is to keep the deposited money readily available to return it back with profit to the depositors as and when demanded. The second responsibility is to use the deposited money on selective basis so as to get back the same within the specialised period.
The businessmen are well aware about the activities of a bank. But unfortunately some of them think that banks, particularly those in the public sector, hold the government money and they can lend out the same without making any delay and thought. Of course, the banks also hold some public deposits but those deposits are also withdrawable at any time. The banks can also take loans from the central bank and the money market at a cheaper rate and can lend out the same at a higher rate.
The bankers always get pressure from the govt. and the general public to make credit available without any hassle. Our experience shows our repayment habit is very shy. The money taken from banks and financial institutions do not come back regularly in accordance with the schedule for repayments there of. Only a few borrowers keep a good track report, but many borrowers still tend to consider that they do not need to repay. As a result, the non-performing asset of a bank goes up. In the process, banks become vulnerable both at home and abroad. Despite many reformative measures taken over the years, the banks could not yet show much commendable progress in their recovery programme. They have been taken recourse to rescheduling the loan accounts of their borrowers to keep the loan account alive and to show good earning.
If the system of actual cash and transfer earning during any year under report is practised while calculating the profit, then very few banks will be able to earn profit. Due to illegal transfer of money and remittance, the most of the banks have enforced anti-money laundering policies. As a result, right from opening of letters of credits(LCs) to keeping deposits of money or sending of remittance, the concerned person is being questioned about the money if the size thereof is big. Not only that. The Know-your-client(KYC) system has also put the new comers in a lot of trouble which is encouraging them to blame the banks and discouraging account opening.
It is easy to blame any bank but we need to appreciate the circumstances as to why the banker is reluctant to lend. Despite so many precautions taken, the bankers fail to get back the money. If a big chunk of good money remains locked up, how can a bank run? Amusingly, the non-recovery of loan is hardly discussed. Borrowers say that they have created employment for many unemployed people. But employment creation is not the function of banks and the bankers are not to be expected to consider this. The recent anti-corruption has shown how the politicians, across the divide, have been polluted by the vested interests. It is now stated that because of the arrests of some corruption suspects among the businessmen, many industries are retrenching the employees and the money taken from the banks as loans are at stake. However, those who have taken loans from banks and have not repaid the same are the defaulting borrowers and they are no less responsible for the irregularities that pervade our socio-economic life. But no action has yet been firmly taken against such defaulting borrowers, except some civil suits initiated by the banks. It is thus still to be spelt out to the public whether plundering of depositors' money is a publishable corruption or not.
(The writer is a former General Manager of Agrani/ Sonali Bank)