Wednesday, 26 June, 2019

Tk 15 billion hush money for public banks

Published on: 11:02 am - Friday | June 15, 2018
Finance Minister AMA Muhith has applied a trick in his budget proposals while allocating money for scam-hit banks in the public sector.  He allocated Tk 1500 crore for them in the proposed budget for 2018-19 fiscal year but did not mention in the budget books.
Such allocations were mentioned in previous years’ budget books but this time he dropped the clause probably to avoid criticism from all quarters.
Still, the Finance Minister faced a lot of criticism in Parliament from both  treasury and opposition benches for his failure in controlling loan scams in the banks, money laundering and huge capital flight from the country.
The government pays Tk several thousand crore every year to the state-owned banks to mitigate these banks’ capital deficits. The allotment of this money is given mainly for addressing capital deficit.
In the proposed budget this allotment of Tk 15 billion has been placed under a different title “Equity Reinvestment.” Reportedly it has been registered by the Finance Ministry in a clandestine way in the portfolio’s own budget book.
Sources said that Finance Ministry faces heavy criticism every year for such allotments which is why this time Finance Ministry has put this allotment under cover of a revised heading to keep it hushed up.
Reportedly Tk 106 billion has been paid to state-run banks during last four years to tackle capital shortage. The highest sum has been paid to Basic Bank, which is Tk 33.90 billion.
For Sonali Bank the payment has been Tk 30 billion. For Janata Bank Tk 8.14 billion has been paid; Agrani Bank Tk 10.81 billion and Rupali Bank Tk 3.10 billion.
Earlier this year six state-owned banks sought Tk 200 billion from Finance Ministry to recover from capital deficit. Reportedly Sonali Bank has sought the highest amount of money for this purpose which is Tk 60 billion. Sonali Bank faced over Tk 40 billion losses due to Hall Mark scam.
Janata Bank has asked for Tk 25 billion to fill up capital deficit. Janata Bank fell into monetary crisis by lending Tk 54 billion to Anon Tex Group without abiding by loan disbursement regulations.
Basic Bank had asked for Tk 25 billion to alleviate capital deficit. This bank lost approximately Tk 50 billion through different irregularities and corruption from 2010 to 2014. Rupali Bank requires Tk 12.5 billion to address capital shortage.
On the other hand, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank have sought Tk 73.48 billion and Tk 8billion respectively for the same reason.
It may be added that the current fiscal year’s budget has allocated Tk 20 billion for aiding government banks to get rid of capital shortfall which is similar to the allotment for this purpose in last two fiscal years.
Ibrahim Khaled, Former Deputy Governor of Bangladesh Bank said every year we are observing state-owned banks are counting huge losses. To fulfill the loss the government providing fund by public money this should stopped immediately.
Ahsan H. Mansur, Executive Director of Policy Research Institute of Bangladesh said the state-owned bank counting huge loss due to absence of good governance.
The banks can fulfill the losses by alternative ways.He said if issuance of bond is allowed to meet the capital shortage then the government will not have to provide any cash to those banks.
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