The statement reflects a concerning reality in the governance of many Banks and Financial Institutions (FIs) in Bangladesh. Here’s an assessment based on the situation:
1. Ownership Mentality of Directors:
Some bank directors often behave as if they are the ultimate owners, disregarding the fact that banks deal with public money and are meant to operate under strict regulatory frameworks. This “owner-like” attitude leads to:
- Political influence: Many directors are politically appointed or have strong political backing, which they misuse for personal or partisan gain.
- Loan irregularities: Such directors may influence credit approvals, resulting in loan default, loan rescheduling abuses, and bad asset quality.
- Conflict of interest: They often push for loans to their own businesses, violating arm’s-length principles.
2. Supportive Staff and Lack of Ethical Culture:
Some bank staff support such malpractice either out of fear, loyalty, or personal gain. This includes:
- Bypassing proper procedures
- Ignoring compliance norms
- Leaking confidential information
This weakens the internal control system and increases corruption and inefficiency.
3. Regulatory Failure and Weak Governance:
Despite having regulatory frameworks by Bangladesh Bank and BFIU, enforcement is often weak due to:
- Lack of autonomy of regulatory bodies
- Inadequate punishment for financial crimes
- Delays in legal actions
4. Impact on the Sector:
These practices result in:
- Rising non-performing loans (NPLs)
- Loss of public trust in the banking system
- Deterioration in service quality and professional culture
- Capital erosion and increasing reliance on government bailouts
5. Recommendations:
- Strengthening governance through independent directors and clear accountability.
- Strict enforcement of banking laws and regulations.
- Capacity building for ethical leadership and training for staff.
- Protecting whistleblowers and encouraging transparency.
In summary, unchecked director dominance and staff complicity damage the integrity and sustainability of financial institutions. Reform is urgent to ensure that banks serve the public interest rather than individual power centers.
