Private banks vs. state-run banks

Your front page report of 4th May on the poorer performance of state-run banks is an important issue that needs to be rectified. The sooner it is done the better. One wonders if the relatively relaxed approach of the state-run banks, public as they are and most directors not being directly involved with or benefited from higher profitability of the banks, is responsible for the state of affairs in the state-run banks. They tend to be cautious and careful, avoiding any risks whatsoever. I wonder if you could enlighten the readers about the banks which have the larger volume of bad debts, compared as a percentage of their transactions on annual basis. This will then give a more realistic and relevant picture of the two sectors.
 Most probably, state-run banks take a less demanding and usually request-based approach rather than a critical financial attitude in disbursing loans. Over and above, the loss making public sector is by and large, a poor borrower usually with astronomically high overdrafts, compared to their turnover, with most of their bank accounts being held at SRBs. After all, the margin between borrowing and lending of funds, and a healthy cash flow is the main source of any bank's profitability.
Having many years of experience, as head of both public and private sector enterprises, this writer has observed the poor awareness in public sector enterprises of financial discipline. Is it that with no direct financial ownership by directors/executives, the public sector enterprises normally tend to be poorly managed financially!

Engr.S.A.Mansoor
Dhaka.
sam@dhakacom.com