Palli Sanchay Bank about to collapse

Palli Sanchay Bank, a state-run specialised bank launched to provide services to the rural people, has flopped so far due to mismanagement and political interference.

The bank, started in 2016 with 47 per cent default loan, has seen it rising to 73 per cent by now, official report shows.

Palli Sanchay Bank, or the rural savings bank, cannot realise the money distributed among the clients due to what officials said as inadequate manpower.

Recruitment of 5,500 remained postponed as the candidates recommended by the ministers and members of the parliament have failed to secure minimum marks in recruitment test, according to the bank officials.

The bank was founded to support the government's 'One House One Farm' project.

The government had given approval to hire 11,000 people to raise funds from the people and to monitor the loans.

However, the process came to a halt after recruitment of 6,000 people in the first phase.

The bank has collected deposit amounting to Tk 14.42 billion from clients, along with government financing of Tk 12.27 billion.

As the cooperatives are not repaying loans, an amount of Tk 1.5 billion is not being distributed in the fear of losing the money.

“We've no lack of trust in the poor over repayment of debt. The problem is we don’t have sufficient manpower to realise the money. We’ve held recruitment test for hiring 5,500 people. The police verification is yet to be completed. As soon as the process is complete, we’ll realise the loans.” the bank's chairman Mihir Kanti Majumder told Prothom Alo.

'One House One Farm' project, launched during the Awami League regime in 1996, was cancelled by the Bangladesh Naitonalisht Party-led four-party alliance government. The Awami League revived it in 2009.

Its objective was: "The people must be freed from the vicious cycle of huge micro credit interest. Sustainable funds will be formed through microcredit models.”

Some 2.2 million families were incorporated into the ‘One house one farm’ project in 2016. The plan was to raise the number of families to 6 million by 2020.

The bank issued a circular in November 2017 to hire 5,500 people and one million candidates took part in the test. As many as 5,500 candidates were selected after the written test and viva-voce in June, according to officials.

However, most of the candidates, recommended by the ministers and MPs, could not come out successful in the tests, officials concerned said. The publication of the results was then suspended.

Former deputy governor of Bangladesh Bank Khondokar Ibrahim Khaled thinks specialised banks such as Palli Sanchay Bank should be brought under the jurisdiction of the central bank which has a greater experience in monitoring banking activities.

"It's wrong to depend on the finance ministry's bureaucrats for supervising such a financial institution," he added.

*This piece, originally published in Prothom Alo print edition, has been rewritten in English by Nusrat Nowrin.