Hasty and forceful merging of banks new mask of impunity: TIB

TIBProthom Alo illustration

Transparency International Bangladesh (TIB) has protested the hasty steps for merging banks. The anti-graft watchdog said that the hasty and forceful merging of banks is a new mask of indemnity ongoing in the banking sector.

The organisation also called for a postponement of the bank merging initiatives.

In a statement on Tuesday, TIB said the whimsical announcement of merging of several banks, and the unease of better performing banks at the process, and some of the weak  banks’ disinterest in attempting to merge have overall intensified apprehensions, instability and insecurity in the banking sector. This has questioned the whole merger process even before its start.

TIB thinks the vagueness that has been created through this merger proposal regarding the accountability and the management of bad debts of weak banks that are reeling due to defaulted loans is just another face of “impunity” to the loan defaulters and quarters responsible for scams sidelining the main problem.

Citing media reports, TIB executive director Iftekharuzzaman said apart from a weak bank, none have expressed interest in merger under their own initiatives. On the other hand, it is not the scenario that the healthy banks have willingly and consciously agreed to engage in the merger process. 

It means the entire process is being arbitrarily inflicted from the very beginning, which is a clear violation of the declared guidelines. 

Furthermore, how far is it rational and just to burden the strong banks with defaults and frauds in the name of merger, without any comprehensive evaluation of the weak banks' assets and liabilities? 

The TIB executive director likened the situation to using paracetamol in cancer treatment. He said the culture of default loans is being deepened by shielding the individuals responsible for the defaulted loans and frauds in the name of merger. On the flip side, efforts are underway to make the strong banks digest the bad ones, which is spreading discomfort and fear throughout the sector.

Iftekharuzzaman said all three types of mergers – public to public, private to public, and private to private – are under discussion. Here, it remains unclear how the particular banks have been selected on priority basis for merger and how the strong banks were chosen for merging with the specific weak banks.

Besides, there are some other banks that have been kept afloat through liquidity assistance, he noted.

Iftekharuzzaman pointed out that two government banks that are regarded as strong have significant loads of default loans of their own. Against such a backdrop, without ensuring effective good governance to address the core problems of the banking sector, it will be illusory to think that merely the merger will help combat the crises.

The TIB described the merger as a provision to reward the individuals responsible for the crises in the weak banks, instead of holding them accountable. It provided an impunity to them.

There is a policy in the guideline to maintain secrecy if any irregularities or corruption come up during the audit of weak banks. The TIB believes it will not only hush up the financial irregularities, but also disrupt the process of holding the responsible ones accountable. It is tantamount to safeguarding an unjust. 

The anti-graft watchdog said it is imperative to reform the merger policies based on experts' opinion and international standards to achieve desired outcomes.