No cure without diagnosis for state-owned banks

Update:

At a workshop held on Thursday to review the condition of state-owned banks in the country, speakers highlighted the need for good governance in the sector. The need for good governance is required not only in the banking sector, but in all institutions and department of the government. If the policymakers would keep this in mind, the country and the people would be saved from a lot of suffering.

From the statements made at the workshop by policymakers, lawmakers, heads of the bank boards, and other bank officials, it is evident that all those involved in the banking sector have failed to carry out the responsibilities bestowed upon them. Though default loans have been a long-standing problem of the banks, these have crossed all records over the past eight and half years. No one can escape the blame. The workshop was organized by the financial institutions division and, ironically, the role of the institution itself was questioned. The finance minister has termed the burgeoning default loans as shameful, and this institution will have to bear some of the shame too.

Te finance minister advised the bank officials to run thorough checks on the clients before providing loans. At the same time, he must also guarantee that the officials can provide loans to whom they deem appropriate, and not come under political pressure. He himself said, if a bank collapses, it is a loss to the entire nation. But how can the banks be protected if the persons responsible for the losses cannot be touched?

Speaking at the workshop, head of the parliamentary committee for the finance ministry compared the BASIC Bank scam with robbery, saying that they had wanted to nab the former chairman of the bank, but the Anti-Corruption Commission and the government did not cooperate. This is a serious allegation. Who is pulling the strings? This is to be resolved if any solution to the prevailing problems is to be reached.

Instead of establishing good governance in the banking sector, the finance minister’s recommendation to merge two or three banks together will not do the trick. In the past the government had sold off certain banks for peanuts, on the excuse that these were losing concerns. Those banks are now flourishing. Why do the banks flounder under government management?

If the state-owned banks are to survive, their ailments must be diagnosed correctly. Dabbling with the symptoms will not cure the disease.

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