Now commerce ministry wants to be on boards of state-owned banks

The Ministry of Commerce wants to be part of the boards of directors of state-owned banks, an aim which, according to banking experts, may turn the institutions more bureaucratic rather than commercial.

The ministry has already sent a letter to the secretary of the Financial Institutions Division (FID) of the finance ministry to ensure the presence of its officials as directors on the banks' boards.

The commerce secretary has sought the personal intervention of the senior secretary of the FID in this regard.

Meanwhile, an additional secretary of the FID said the request of the commerce ministry would be considered later.

Khandaker Ibrahim Khaled, former deputy governor of the Bangladesh Bank, said appointing commerce ministry officials as bank directors is not an urgent issue. In his opinion, the more bureaucrats are appointed as directors, the more banks will change into being bureaucratic institutions.

"The recruitment of directors should not be a matter for the ministry. It is a matter of the interests of the people, business and markets. The board should have market-oriented honest people," Khaled said.

In a letter to FID Senior Secretary Zafar Uddin on June 14, Commerce Secretary Zafar Uddin said the driving force of the economy is domestic and international trade. Financial institutions are supporting trade expansion, while the commerce ministry has been working on export growth, import control and internal trade management. Officials of the commerce ministry have professional knowledge and skills in financial and banking issues.

"In fact, the banking and financial sectors and the Ministry of Commerce are interrelated, and an important partner of both [of them] is businessmen. But no officials of the Ministry of Commerce are getting an opportunity to play important roles as directors on the boards of [state-owned] banks."

If experienced officials of the commerce ministry are nominated to the boards of directors of the banks, they will be able to make important contributions, Zafar Uddin added.

According to sources, the FID appoints directors in banks on the basis of political recommendations and personal acquaintances.

They also said irregularities in the banking sector increased during the first term of the present government due to the appointment of directors and chairmen in various banks on political considerations.

Subsequently, the trend of appointing former and serving bureaucrats as chairmen and directors of state-owned banks registered an increase.

The government owns 16 commercial, specialised and non-scheduled banks, including four commercial banks.The FID appoints directors to these banks.

These banks have 110 directors, apart from managing directors, among whom are 10 former bankers, 25 former bureaucrats and 31 government officials.

Of them, there are eight former and current bureaucrats of the FID. Several former and current officials of other departments, like the Finance Division, Internal Resources Division and Economic Relations Division of the finance ministry are on the banks' boards.

The four state-owned commercial banks – Sonali, Janata, Agrani and Rupali – have 29 directors on their boards. A breakdown of figures shows seven ex-bankers, eight former bureaucrats and three government officials among the directors.

Under the FID, there are 15 non-bank financial institutions, insurance, stock market and microfinance related organisations and supervisory institutions, where there are 112 directors on the boards.

Only the board of Jiban Bima Corporation and that of Sadharan Bima Corporation have two officials from the commerce ministry.