Cooperative in the name of a bank

The Dhaka Mercantile Co-operative Bank is licensed as a co-operative, but acts like a bank. Its interest rate is twice that of normal banks, but it has to depend on loans from other banks to pay this high interest. It has taken deposits from over 200 thousand clients.

So paying back this approximate amount of Tk 1000 crore upon request can prove to be risky. The co-operative authorities and Bangladesh should come forward with positive intervention.

Apprehending a collapse, the Dhaka district co-operative office has directed the institution to stop any further collection of deposits, provision of loans and selling of shares. It has issued a letter for an administrator to be appointed. The prime minister’s office has also directed Bangladesh Bank to investigate the matter.

About a year ago, the attorney general’s office sent a letter to the co-operative’s office against the institution because of its unlawful and unapproved opening of branches all over the country and collecting deposits indiscriminately. Everyone is in the know about the matter, but action is slow. In the interests of the 200 thousand or so clients, action can be stalled no longer.

The irregularities are not just in the matter of interest rates, but also in determining dividends, loans and other matters. In the past, Destiny and other such outfits has extorted large sums of money from their clients in a similar method. Many families were virtually on the streets, having falling victim to such scams.
In recent times, the banking and finance sector has been rife with corruption. Funds of the general public, even of the government, are being pilfered all too easily. This has raised serious questions about the overall administrative responsibility of the banking system.

The Dhaka Mercantile Co-operative Bank is not alone. There are many other such institutions in existence. It is imperative that good governance and order is enforced in these institutions without further delay.