SB loan scams due to internal control inefficiency: Muhith

Finance Minister AMA Muhith on Saturday said the Sonali Bank (SB) loan scam incidents in 2012 happened due to lack of efficiency in internal control system of the bank.
"To enhance customers' trust and confidence towards the bank, the management should concentrate on increasing its internal control system," the minister said while he was speaking at the bank's annual conference 2014 as the chief guest held at a city hotel.
Mr Muhith warned about the hassle of online banking saying that the bank should be aware of the technical glitch of online banking.
The Finance Minister expressed his satisfaction over the banking sector performance of the country saying that "the country's banking sector now stands on a strong base with satisfactory expansion".
Chairman of the Sonali Bank Board of Directors Dr. AHM Habibur Rahman presided over the conference where Bank and Financial Institution Division Secretary M Aslam Alam and Managing Director Pradip Kumar Dutta spoke on the occasion.
Mr Aslam Alam identified a lot of loopholes in the Sonali Bank's risk management system.
He said the looting of money from the bank's Kishoreganj Branch, hacking of password and loss of US$ 0.25 million of the bank and non-functional close circuit camera in the head office are all related to the risk management inefficiency.
"The bank has various risk factors which need to be properly identified and resolved," the Banking Secretary said.
Mr Aslam Alam bitterly criticised the Sonali Bank's business model saying that 'historically Sonali Bank provided loan to corporate houses most of which have become defaulters".
"The bank should change its business model and provide loans to small and medium enterprises across the country," the Secretary suggested.
He said the bank executives are enthusiastic about collecting deposits but are reluctant to disburse loans. "This attitude has resulted in a negative loan and advance performance and a poor performance in earning operating profits in 2013."
The Secretary identified introduction of core banking as a serious challenge to the bank.
He said risk management is not only a theoretical issue but also is very much a practical one. Mr Habibur Rahman admitted the faults identified by the Secretary and said the bank will now focus on SMEs.
He said the Hallmark scandal happened due to involvement of some unscrupulous bank officials.
He said the bank has come out from an image crisis it suffered from the Hallmark scandal and now it is giving priority to recovery of default loans and further business development.
The Managing Director gave a detailed picture of the bank's performance in 2013 during the conference.