NCBs miss yet another deadline to finalise corporatisation process
Tuesday, 4 September 2007
FE Report
Three nationalised commercial banks (NCBs) have missed yet another deadline to finalise the corporatisation process, thus delaying the banks' restructuring process further.
The state-owned Sonali, Janata and Agrani banks were required to seal the vendor's agreement by August 31 to ensure their operations as public limited companies (PLCs). The first "non-binding" timeline expired on June 30, 2007.
"It's unfortunate that the banks have failed to meet even the second timeline for finalising the corporatisation process," a source said.
The source said if corporatised, it could clear the way for the banks' greater autonomy and allow the central bank to monitor their activities more intensively.
But a senior official of Sonali Bank said the corporatisation process is expected to be finalised by the end of this month.
"The banks are ready to clinch the vendor's agreement within September. I think, there will be no more delay in this respect," he noted.
The official, however, declined to comment on why the corporatisation process was getting stuck time and again.
He also maintained that modernisation was the cornerstone of sustainability of the public sector banks, given the fact that the private commercial banks continued to generate what he called "super profits."
The banks have missed two deadlines on corporatisation, thanks mainly to the delay in signing the vendor's agreement.
"Perhaps, the banks are dragging their feet on the pretext that the deadline, as set by the finance ministry, is non-binding. Whatever may be the reasons, the delay on their part reflects their reform-phobia," a source noted.
Earlier, the finance ministry had sent the vendor's agreement to the banks after vetting from the law ministry.
Also, the Registrar of Joint Stock Companies and Firms accorded registration letters, a requirement to ensure their business operations as limited companies.
The wind of reform has swept through the Bangladesh's banking system since 2004 when the World Bank lent out a substantial amount of money to restructure the NCBs.
Under a bank-financed project, Rupali Bank is being privatised, while three other NCBs are set to follow suit.
With a US$ 257.63 million loan from the global lender, the project is designed to overhaul Bangladesh's financial sector, characterised by inefficiency and corruption.
A private management, hired by the government, has been functioning at Agrani Bank to set up grounds for the ultimate privatisation of the bank, while a private sector executive was also appointed in Janata Bank to head its management.
As part of the broader reform in the country's banking sector, the government appointed one new director for each of Sonali Bank, Janata Bank and Agrani Bank to meet the World Bank requirements.
The newly-appointed directors will assume office after finalisation of the corporatisation process, it is learnt.
Three nationalised commercial banks (NCBs) have missed yet another deadline to finalise the corporatisation process, thus delaying the banks' restructuring process further.
The state-owned Sonali, Janata and Agrani banks were required to seal the vendor's agreement by August 31 to ensure their operations as public limited companies (PLCs). The first "non-binding" timeline expired on June 30, 2007.
"It's unfortunate that the banks have failed to meet even the second timeline for finalising the corporatisation process," a source said.
The source said if corporatised, it could clear the way for the banks' greater autonomy and allow the central bank to monitor their activities more intensively.
But a senior official of Sonali Bank said the corporatisation process is expected to be finalised by the end of this month.
"The banks are ready to clinch the vendor's agreement within September. I think, there will be no more delay in this respect," he noted.
The official, however, declined to comment on why the corporatisation process was getting stuck time and again.
He also maintained that modernisation was the cornerstone of sustainability of the public sector banks, given the fact that the private commercial banks continued to generate what he called "super profits."
The banks have missed two deadlines on corporatisation, thanks mainly to the delay in signing the vendor's agreement.
"Perhaps, the banks are dragging their feet on the pretext that the deadline, as set by the finance ministry, is non-binding. Whatever may be the reasons, the delay on their part reflects their reform-phobia," a source noted.
Earlier, the finance ministry had sent the vendor's agreement to the banks after vetting from the law ministry.
Also, the Registrar of Joint Stock Companies and Firms accorded registration letters, a requirement to ensure their business operations as limited companies.
The wind of reform has swept through the Bangladesh's banking system since 2004 when the World Bank lent out a substantial amount of money to restructure the NCBs.
Under a bank-financed project, Rupali Bank is being privatised, while three other NCBs are set to follow suit.
With a US$ 257.63 million loan from the global lender, the project is designed to overhaul Bangladesh's financial sector, characterised by inefficiency and corruption.
A private management, hired by the government, has been functioning at Agrani Bank to set up grounds for the ultimate privatisation of the bank, while a private sector executive was also appointed in Janata Bank to head its management.
As part of the broader reform in the country's banking sector, the government appointed one new director for each of Sonali Bank, Janata Bank and Agrani Bank to meet the World Bank requirements.
The newly-appointed directors will assume office after finalisation of the corporatisation process, it is learnt.