BB to constitute banking commission

Bangladesh Bank has taken initiative to form a nine member committee to find irregularities, corruption and weaknesses in the banking sector. The committee will look for irregularities in the loan approval and disbursement system of public and private banks and weaknesses in the collection system. 

Following a writ petition, the High Court ordered the formation of the committee in November 2019. After almost 21 years, such a committee is being formed to reform the banking sector.

The new committee will look into the process of appointing members of the bank's board of directors, enhancing skills in bank management and improving the quality of risk management. It will also look at strengthening, enhancing the quality of customer service and holding commercial banks accountable to the Bangladesh Bank. The committee will give their views and recommendations on these issues. The court directed to take their views and recommendations seriously.

Earlier, in November 2019, the High Court ordered the formation of a committee in the banking sector against a writ petition. On the basis of this, on February of last year, Finance Minister AHM Mustafa Kamal decided to form a committee for the banking sector. Recently, a letter in this regard has reached the Bangladesh Bank from the Ministry of Finance. It called for the formation of a committee on the banking sector to identify irregularities and weaknesses in the banking sector and to give opinions and recommendations on remedying them. After receiving the letter, the central bank has taken initiative to form the same. 

Sources said that in December 1999, the Bank Reform Committee reported. The Chairman of the committee was the former caretaker government adviser Wahiduddin Mahmud. No reform committee has been formed since then. About 21 years have passed since then. After a long time, a new committee is being formed to reform the banking sector in the country.

When the Hallmark scandal was unearthed in 2013, there was a demand for the formation of a bank reform commission. After that, the demand for the formation of this commission became even stronger when incidents of big corruption started appearing in the banking sector one by one. 

Since then, Center for Policy Dialogue (CPD), a non-governmental research organization, Transparency International Bangladesh (TIB), Citizens for Good Governance (Sujan) and eminent economists have recommended for the formation of a banking commission. 

But the government formed this commission by no means. Even though the two finance ministers of the previous two terms of the government spoke about the formation of a bank reform commission, it has not been implemented so far.

During the announcement of the 2014-15 budget, former finance minister MA Muhith had said to form a bank reform commission. He then announced the formation of the Banking Commission at the annual conference of Sonali Bank on 5 February 2016. During the announcement of the national budget in June 2019, Finance Minister AHM Mustafa Kamal announced the formation of a bank reform commission in his budget speech. But the commission was not formed. According to a CPD research report in December 2016, Tk 22,000 crore has been embezzled in 10 major frauds in the banking sector. Then the demand for the formation of the commission became even stronger.

In February 2019, the Human Rights and Peace for Bangladesh (HRPB) filed a writ petition in the High Court seeking directions to form a banking commission. It called for the commission's opinion on embezzlement of bank money, irregularities in loan approval, investigation into interest waivers and making recommendations. At the same time, a writ petition was filed to investigate the money laundering case. HRPB highlighted various irregularities, corruption and money laundering in the banking sector over the last 20 years. Following the hearing of that writ, in November 2019, the High Court, in coordination with the government, ordered Bangladesh Bank to form a nine-member committee. It said that weaknesses in the approval, disbursement and collection methods of public and private banks need to be addressed. Therefore, Bangladesh Bank will be able to have skilled bankers, former bankers and eminent economists in the committee. The Central Bank will take seriously the views and recommendations of the Committee. On the basis of this, in February last year, Finance Minister AHM Mustafa Kamal announced the government's decision to form a committee. Then, at a function on February 22 of last year, the CPD said it was not enough to just form a banking committee. It must be allowed to function independently.

According to sources, Bangladesh Bank has started searching for members of the committee as per the court order. A letter in this regard has recently been sent to the Ministry of Finance, Bangladesh Institute of Development Research (BIDS), Bangladesh Institute of Bank Management (BIBM). Apart from this, a few others have written to former central bankers and commercial bankers seeking their views. After receiving their views, the central bank will review and finalize the process of forming the committee.

Chairman of the Bank Reform Committee 1999 and former caretaker government adviser. Wahiduddin Mahmud mentioned some aspects of their report on the Facebook wall on December 9. 

He wrote, ‘I think some aspects of this report need to be updated. In such a market economy there is an opportunity to buy shares and take ownership of a bank. But the report does not say that it is dangerous to create an exclusive occupier in this sector by abusing this opportunity and that there should be some regulation to remedy it. Not much has been said about giving a chance to the bankruptcy law to close a non-profit bankrupt company. The issue of anti-money laundering activities of Bangladesh Bank for monitoring large scale fraud and money laundering through the banking sector was also not discussed then.

ask/wi