Govt moves to train directors of state banks

The government has decided to impart governance training to the directors of public banks, non-bank financial institutions and insurers to make better boards and avoid financial mishaps in the financial enterprises.

Analysts, however, once again remain skeptical on the latest move saying the similar steps had been taken by the government two years back but ended in smoke.

The government’s move came on the heel of several financial scams in the state-owned entities such as Sonali, Janata and BASIC banks.

The Financial Institutions Division (FID) under the Finance Ministry is set to develop a reformed training method to gain feedback and suggestions from experts in the banking industry, according to officials in the ministry.

A five-member committee headed by FID Additional Secretary ABM Ruhul Azad will be formed to make the process faster. The task of the panel is to prepare training modules and implement the training.

“We’ll organise a large-scale webinar training programme in the middle of next month for directors of state-owned banks,” Azad told Business Insider.

The Financial Institutions Division wants to change the mindset of the directors of the banks through the training, he said.

Analysts cast doubt on the government’s move.

“The Financial Institutions Division earlier provided training for bank directors in 2018 but defaulted loan has not declined in the last two and a half years,” said Khandaker Ibrahim Khaled, the former deputy governor of Bangladesh Bank.

Previous training failed to bring any results as the government took the wrong steps by appointing party men as the directors of the banks, he said.

The banking sector has to bear the brunt of the wrong decisions, said Khaled suggesting appointments of professionals and skilled people in the board.

BASIC Bank still bears the burden of the wrong appointment of Abdul Hye Bachchu in 2009. After Abul Maal Abdul Muhith took the charge of finance ministry in 2009, the bank directors having no experience of running banks were recruited on the political consideration. Resultantly, the allegations of financial scams in the banking sector soon began to the surface.

In the face of huge criticism, Muhith backtracked and choose former bureaucrats and bankers as the directors instead of party men.

Still, the government is yet to take any actions against the directors found guilty of wrongdoing.

At present, there are 20 state-owned banks, financial institutions and insurance companies. The total number of directors in the public financial entities is 140.