BDBL selling foreclosed plots at throwaway prices

Political pressure plays its part in the acts

Jasim Uddin Haroon
The state-owned Bangladesh Development Bank Limited (BDBL is selling out !oreclosed land at
rates !ar "elow the market prices# people !amiliar with the matter have told the $%& 'n an
average each year the BDBL is selling land o! () pro*ects o! its loan de!aulters# worth more
than Tk +&) "illion# out o! (() such pro*ects# since its inception through the merger o! the
Bangladesh ,hilpa Bank (B,B and the ,hilpa -in ,angstha (B,-, in .)+)& This year the num"er
o! sold-out industrial plots may rise to /)# according to o!!icial sources with the "ank& The
industrial plots with all in!rastructure !acilities including those o! power and gas connections
are located in di!!erent industrial hu"s at prime locations o! the country& 0ndustrial upland with
ready in!rastructures is very scarce in the country and the prices are surging "y leaps and
"ounds every year& The sale o! such ready industrial plots "elonging to loan-de!aulter
entrepreneurs is reducing the BDBL1s earnings to a large e2tent and also encouraging an un!air
means in the country1s key !inancial sector# sources said& ,ources in the real estate sector said
prices o! the land would "e at least two to three times higher# i! those had "een sold
competitively at the market prices& 0nsiders said in many cases the !inancial institution has
"een a"using the government1s order regarding recovery o! the cost o! !und# issued in $e"ruary#
.))3& 4ccording to the government order# in cases like natural calamities and death o! owners#
the "ank can accept prices "elow the cost o! !und in selling the pro*ect land o! de!aulter-
"orrowers& The BDBL has sold out a num"er o! such plots over the last si2 months& 0t sold out
the ,hah 5ukdom Te2tile 5ills in the B,606 estate in -a*shahi at much lower prices&
$% +)&++&.)+.
Muhith hints at appointing politicians to SCBs' boards
Politicians# among others# are likely to "e inducted into the "oards o! the state-owned "anks
within the ne2t !our to !ive days# $inance 5inister 454 5uhith said ,unday& 7Political
personalities are also in trade# industry and education& ,ome o! them may "e appointed& 0 don1t
know#7 5uhith told reporters when asked a"out his stance on the appointment o! "ank directors
on political consideration& 0t is di!!icult to make a distinction "etween a "usinessman and a
politician as politicians are also involved in "usiness and industry# he argued& 7,ome o! them
might "e there ("oards#7 5uhith said# adding many non-political personalities were appointed
as directors in the state-owned "anks& The minister was talking to the newsmen a!ter holding a
meeting with Turkish La"our and ,ocial ,ecurity 5inister $auk 6elik at the %conomic -elations
Division (%-D& 6urrently# a"out 8) posts o! directors in +) state-owned commercial "anks
(,6Bs and specialised "anks are lying vacant !or more than two months& The tenure o! most o!
the directors and the chairmen o! !our ,6Bs -- ,onali# Janata# 4grani and -upali -- e2pired in
early ,eptem"er last& The government reappointed all !our chairmen o! the ,6Bs !or a period
o! one to two years in mid-,eptem"er& The 5inistry o! $inance (5o$ also reappointed !our
directors to !our ,6Bs !or a period o! two years& Besides the ,6Bs# most o! the posts o!
directors in state-owned specialised "anks -- Bangladesh 9rishi Bank# -a*shahi 9rishi Unnayan
Bank (-49UB# 4nsar-:DP Bank# B4,06 Bank# Bangladesh 9armashangthan Bank and Bangladesh
Development Bank have also "een lying vacant !or long# sources said& '!!icials at the 5o$ said
"oards o! !our state-owned commercial "anks (,6Bs will "e reconstituted !irst& ,peciali;ed
"anks would !ollow& They said hectic lo""ying is continuing "y the leaders and those loyal to
ruling Bangladesh 4wami League to have their place con!irmed in the "oards o! government-
owned "anks&
$% +.&++&.)+.
Dictated loans major sources of SCB troubles
BB suggests actions to improve situation
<a;mul 4hsan
The Bangladesh Bank (BB has proposed a string o! measures to the 5inistry o! $inance (5o$ to
shore up the trou"led state-owned commercial "anks (,6Bs& Putting an end to the practice o!
sanctioning loans under pressure !rom power!ul =uarters and stopping the purchase o! loans o!
=uestiona"le =uality !rom private commercial "anks (P6Bs -- are two ma*or steps suggested "y
BB to help !our ,6Bs to strengthen their !inancial "ase and overcome their image pro"lem# a
central "anker said& 7'ur suggestions to 5o$ to revive the status and image o! !our ,6Bs need
special attention o! the !inance ministry o!!icials as directives !rom them to senior "ankers o!
state-owned "anks matter most#7 a top BB o!!icial told the $% on >ednesday& He said the BB is
also serious a"out en!orcing the measures# su"mitted to the ministry# in all !our ,6Bs -- ,onali#
Janata# 4grani and -upali& The proposals o! central "ank said the ,6Bs must "ring an end to all
!raudulent activities involving the sanctioning and dis"ursement o! loans& The BB in its
proposals said the ,6Bs have to comply with the directives o! BB on managing their loan
port!olios and asset =uality to avert any de"acle in the !uture& The "anks under no
circumstances should e2ceed the approved limit o! large non-!unded loan and they must secure
approval !rom their chie! e2ecutive o!!icers in the process o! sanctioning large amount o! non-
!unded loan& The "anks also should undertake special drive to recover their huge classi!ied
loans# BB proposals said& $urthermore# the proposals said without meeting the credit risk
grading and due diligence no new loan should "e sanctioned& Besides# the ,6Bs should !ully
comply with the conditions set in the 5emorandum o! Understanding (5oU signed with the BB
and initiate special audit o! its all "ranches# i! needed& The BB o!!icials said the ma*or
pro"lems lie with ,6Bs in granting loans "eing in!luenced "y power!ul =uarters o! the
government ignoring the "asic !undamentals and re=uirements in lending criteria& 70n many
cases# we have to entertain re=uests or orders !rom top policy makers o! the government in
sanctioning "ank loans to undeserving entities or individuals#7 a general manager o! an ,6B told
the $%& 7>e are threatened with dire conse=uences like termination or trans!er !rom power!ul
=uarters in case we e2press ina"ility to sanction loan or re!use to provide any unethical loan
rescheduling !acility#7 he added&
$% +8&++&.)+.

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BB likely to get power to remove MDs of SoBs
<a;mul 4hsan
The 5inistry o! $inance (5o$ has agreed to a proposal o! the 0nternational 5onetary $und (05$
to give the Bangladesh Bank (BB the authority to !ire managing directors (5Ds o! the state-
owned "anks (,oBs -- "oth commercial and specialised ones -- !ound guilty o! any wrongdoing&
But# the ministry still remains rigid on the issue o! authorising the central "ank to dismiss
directors# chairmen or a"olish the "oards o! the "anks concerned# highly placed sources in the
5o$ and BB said& The enhanced power would "e delegated to the BB "y amending the e2isting
Bank 6ompany 4ct (B64# .))(& The !inal dra!t o! a "ill seeking to amend the said 4ct is almost
ready !or su"mission to the 6a"inet Division !or approval& The partial acceptance o! 05$
suggestion has already "een conveyed to the local o!!ice o! the $und# sources said& $inance
5inister 454 5uhith had at least two meetings with %teri 9vintrad;e# 05$ -esident
-epresentative in Dhaka# in the current month to sort out di!!erences over amendments to the
B64# .))(# particularly on BB and ,oBs# it is learnt& 4 !inance ministry o!!icial said the 05$ local
o!!ice has accepted the latest stance o! the government on empowering the BB in line with its
suggestion# though partially& He said the BB is yet to "e competent enough to e2ercise a"solute
power to regulate state-owned "anks as suggested "y the 05$& 7>e have retreated !rom our
earlier position# at least& 4ny a"rupt power trans!er !rom !inance ministry to BB !or regulating
the government-owned "anks could prove to "e too much "ecause o! the poor monitoring
capacity o! central "ankers#7 a senior !inance ministry o!!icial told the $%& However# top BB
o!!icials said much would depend on the position o! 05$1s upcoming mission& The %2tended
6redit $acility (%6$ mission o! the 05$ is scheduled to arrive in Dhaka on <ovem"er .@ ne2t to
review the development o! re!orm measures in !inancial sector including the revenue issues&
Under the %6$ programme# the multilateral lending agency asked the government to empower
the BB to dismiss "ank directors# managing directors and a"olish "oards o! directors o! all ,oBs#
i! needed&
$% .)&++&.)+.
S panel warns C!"s of state banks against rising irregularities
The parliamentary standing committee on the !inance ministry yesterday warned state "anks
against rising irregularities# which it said are eroding pu"lic con!idence in them& The
committee asked the !inance ministry and the Bangladesh Bank to act !ast to "ring discipline to
the "anks1 !unctions# said some mem"ers o! the committee a!ter a meeting& 4H5 5osta!a
9amal# chairman o! the committee# presided over the meeting at the Jatiya ,angsad Bha"an#
attended "y managing directors o! all eight state-owned "anks& ,9 ,ur 6howdhury# deputy
governor o! the central "ank# was also present& The parliamentary watchdog arranged the
meeting a!ter gross irregularities were detected in these "anks& Pu"lic con!idence in these
"anks was damaged "y the recent Hall-5ark scam# said the committee mem"ers =uoting 9amal
as saying& The once little-known te2tile company# Hall-5ark Aroup# alone took away Tk .#?3?
crore on !orged documents !rom a ,onali Bank "ranch& 9amal also asked the !inance ministry
not to appoint any "ank director on political considerations& BDirectors in the state-owned
"anks should "e appointed on the "asis o! merit#C he said& The committee o"served that the
"asic structures o! these "anks have 1almost collapsed1 due to corruption& B>e have e2pressed
resentment over the per!ormance o! the state-owned "anks# especially in giving and recovering
loans#C said Ta*ul 0slam# a mem"er o! the parliamentary committee and the chie! o! a panel
that is pro"ing the Hall-5ark scam& 0slam said the committee has asked the BB to ensure
accounta"ility o! the o!!icials o! the state "anks& Things cannot go on in the way the state
"anks are running at present# said another mem"er o! the committee# adding that !inancial
order must "e ensured& B>e1ve "een warned to "e vigilant so that any Hall-5ark-like scam
cannot occur in !uture#C said the managing director o! a state "ank# asking not to "e named&
He said ,onali Bank and B4,06 Bank !aced most o! the criticism !rom the lawmakers !or their
!ailure in running the "anks& ,ome other "anks# including Janata# told the committee that their
per!ormance has improved over the years# he said&
D, .)&++&.)+.
Boards o! state "anks inactive !or ( months
#M$ asks govt to appoint directors as per Bangladesh Bank criteria
-e*aul 9arim Byron
The "oards o! state "anks have remained dys!unctional !or more than three months as the
government has "een una"le to appoint directors to the "anks1 highest policymaking
panels&'!!icials o! these "anks said they cannot take important decisions# including those !or
approving private sector loans and rescheduling loan proposals# in a"sence o! the
"oards&$inance ministry o!!icials said the reconstitution o! the "oards is getting delayed as the
!inance minister !inds it di!!icult to choose the right people !or the posts a!ter the recent
scams and the allegation o! involvement o! their directors in the !rauds&The 0nternational
5onetary $und has also asked the government to appoint directors who meet the 1!it and
proper1 criteria o! the central "ank&4n 05$ mission during its recent visit to Dhaka made the
suggestion and the government also committed to go "y the recommendation# a !inance
ministry o!!icial said&,ince the !irst week o! ,eptem"er# a"out /) posts o! directors in di!!erent
government-owned "anks and !inancial institutions have "een vacant& '! the posts# .? are with
,onali# Janata and 4grani "anks&The managing director o! a state "ank said the amount o!
de!ault loan may increase much this year in a"sence o! their "oards&He said loan rescheduling
is not possi"le without the "oard1s decision and !or loan recovery# rescheduling is
necessary&The managing director o! another "ank said they contact the !inance ministry almost
every week# and the o!!icials at the ministry assure them that the "oards will "e reconstituted
ne2t week "ut it does not happen&The !inance minister has contacted some eligi"le people and
o!!ered them directorship in the "oards "ut they have re*ected the proposals# the ministry
o!!icials told The Daily ,tar&The o!!icials said the !inance minister has "een talking uno!!icially
with the central "ank on whether some o! his choices can "e appointed as directors&They said
many o! the vested =uarters are still lo""ying !or the posts o! directors at the state
"anks&There have "een allegations that some o! the directors take commission !rom "usinesses
as well as individuals in helping them get loans !rom the "anks&4!ter coming to power in .))D#
the present government appointed some !ormer leaders o! Ju"o League and 6hhatra League#
the youth and student wings o! the ruling 4wami League# as the directors o! the "anks&The
state "anks had made some progress as a result o! the implementation o! the >orld Bank1s
!inancial sector re!orm programme "ut it was hampered in the recent times due to the
inter!erence "y some directors with political a!!iliation&The central "ank also warned the
"oards o! the "anks and the !inance minister several times a"out such inter!erence&0n
Decem"er .)+)# the central "ank1s "oard also discussed the issue o! inter!erence "y the state
"anks1 directors& The "oard e2pressed concern over the matter and decided to convey the
concern to the government in writing&Later in early .)++# Bangladesh Bank Aovernor 4tiur
-ahman wrote a letter to the !inance minister# sayingE B0n the day-to-day activities o! the
"anks vi; loan approval activities# trans!er and promotion# direct inter!erence "y the "oards
and incidences o! e2erting in!luence have come to our knowledge&CThe letter also said the
issues were very important and needed immediate steps&But no action was taken& Later the
!inance minister organised a !ace-to-!ace meeting "etween the BB o!!icials and the directors o!
the state "anks where the directors severely criticised the central "ank o!!icials&
D, +@&+.&.)+.