The Independent
March 31, 2012
M. Serajul Islam
A young member of parliament on a popular TV talk show said
something astounding on the permission that the Government has given to
establish a number of private universities. He said that permission has been
given to one applicant who cannot even sign his name! He did not name the
individual but he assured viewers that in due time he would reveal it.
In the same talk show, the permission being given to a number of
new banks was also discussed. I was pleasantly surprised to hear a ruling party
MP criticize the issue. He said that to his knowledge, those who applied are
not in a position to raise the minimum of hundreds of crores of Taka necessary
up front to establish a Bank these days. He was apprehensive that the sponsor
Directors of these new Banks would loan money, using political influence, from
the nationalized Banks that in turn would take public money away for benefit
for a few individuals with little of banking credentials but a lot of political
influence.
I can guess why certain politically connected individuals would be
so interested to be sponsor directors of private banks. By investing a
pittance, sponsor directors in the past have minted fabulous amounts. It is not
that they just minted money; even their behaviour pattern has been affected by
the money they have made. When these sponsor directors address their bank
officials, they address them like they are royalty and the bank officials,
serfs! They insist and their employees oblige for fear of their jobs that they
be addressed as “Hon’ble Directors”!
Nevertheless, these private banks have played a great role in the
economic miracle of Bangladesh. Bangladesh’s RMG sector has emerged because of
the financial backing they have received from these private banks. However, the
private banks are already over numbered and the sector, over saturated. In
fact, if the Bangladesh Bank would impose the strict regulations, a good number
of the existing banks would go under the water because their fundamentals are
wrong. They are surviving by managing and juggling their accounts by many
tricks available with the regulatory authority under political pressure or otherwise to overlook
their violations of banking regulations. The BNP’s statement not too long ago
that some banks could fail was not entirely baseless.
Added to this poor health of the private banks, the pool of
officers required at run banks at managements levels are limited and existing
banks are in shortage of quality officers. An interesting phenomenon of the
private banks in Bangladesh is the regular movement of officers at management
levels from one bank to another by lures of pay and other perks. One has to
wonder from where the new banks would get the senior officers they would
require to operate successfully.
The phenomenal development in the banking sector in terms of
technology has allowed banks to offer services to the clients more efficiently
with less manpower and without reaching out to them in the physical sense. In
other words the banking sector is not really in need of more new banks for better
service. In fact, what is more necessary is to consolidate the existing banks
by amalgamation of those banks whose fundamentals are still weak and surviving by managing things in a manner that
are neither transparent nor legal. The new banks that the government will bring
to the banking sector will weaken these banks and make them susceptible to
collapse and create a situation that could be dangerous for the economy and the
image of the country.
Clearly, the names that have come in the media on the applicants
for the new banks do not increase anybody’s confidence. The other very
important point here is the fact that it would not be as easy for the sponsor
Directors of these new banks to become rich as the sponsors of the first and
second generation banks have been. Those using their political influence to get
the government’s permission for establishing new banks may face a rude shock
when they get down to operations. There is great risk; their efforts could end
in failure and with that, the money of the people who would be
depositing/investing money in their banks. Even the better banks of the country
are currently going through a very difficult phase. Their managers running from
pillar to post chasing deposits like their lives depended on it.
Then of course there is the public perception that the money that
has vanished from the share market, money of hundreds of thousands of small
investors who were cheated in the share market scam would find its way into
these new banks. The perception is not
something wishful because the fate of the thousands of crores of money that has
been skimmed off from the share market has never been found although a committee
set by the government did name a few individuals who the report said were
responsible for the scam. If this perception is true, then on the point of
ethics, the new private banks would always remain suspect.
It is general knowledge in the banking sector that Bangladesh Bank
opposed the proposal for new banks seriously. The Bangladesh Bank Governor tried
his best to oppose the Finance Minister who wanted the proposal to go through.
In the end, it is not economics or banking needs that has won. The proposal for
new banks got through for reasons of politics. Given the ugly nature of our
politics, one has to be apprehensive about the impact that these new banks
would have on the economy. Where the first and second generation banks have
helped the economy, the third generation banks, because they are being given
for political reasons, could have an
impact on the banking sector that it could very well do without.
Politics that helps resolve conflicts in other countries to
develop has been the bane of our development efforts. Without the type of politics
that we have witnessed in the last four decades of our independence, we would
have by now achieved a great deal more than what we have. The political culture
that is now a common topic of discussion everywhere in the country, by common
acknowledgement, has hit a nadir.
This political culture reflects no tolerance to opposing views and
no respect for anyone else except one’s own needs and interests. Greed is
another characteristic that our present political culture reflects. It is this
culture that has led to the Government to give permission to set up new banks.
It is again this culture that has been the key factor for permitting the new
private universities. Like in the banking sector, the need of the moment is to
close a number of the existing universities. Giving permission for new ones
would be giving incentive to business of making money ahead of the needs of
education.
It is open secret these days that a lot of private universities
sell degrees. Darul Ahsan University has done this right under the nose of both
the BNP and AL governments. Even the best private universities run from a pool
of teaching staff and only a few can claim to have a teaching staff of its own.
The new private universities would be established in places far from Dhaka. Where
would they find the teaching staff? If the objective of the government is to
give every district of the country a private university that in the Pakistan
days did not have even a good college, then it can be congratulated. But sadly
the truth is that these new universities would not be able to compare with the
private colleges of those days.
Not long ago, the University Grants Commission that regulates the
private universities had voiced concerns about many of the existing universities.
It seems the authority of the UGC has been taken over by the needs of politics
and the greed of politically connected people. The young parliamentarian now has
a national duty to reveal the name of the illiterate person who will now own a
private university.
The writer
is a former Ambassador to Japan.
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