In a major banking sector reform, the government contemplates appointing advisors to nationalised commercial banks (NCBs) to help improve their management skill and financial health.

The finance ministry has finalised a draft detailing tasks of the advisors, which will be presented at a meeting of the Cabinet Committee on Economic Affairs to be held tomorrow.

The government decision to appoint the advisors came following recommendations of the World Bank and the International Monetary Fund (IMF).

The World Bank will provide the necessary funds and technical assistance for the appointments.

Agrani Bank

According to the finance ministry proposal, the government will appoint an expert body, comprising a chief executive officer (CEO) and seven advisors for three years for reform of the state-owned Agrani Bank. If necessary, the tenure of the expert body may extend by one year.

The body will work for the development of the management and financial health. Besides, it will also ready the bank towards privatisation.

The reform work will conclude after preparing the bank for partial or full privatisation, according to the proposal.

A Bangladeshi citizen will hold the post of the CEO and advisors may both be local or foreign citizens.

Under the supervision of the

government appointed board of directors, the CEO will enjoy the executive power.

The advisors will be assigned in departments of credit, loan portfolio management, human resources, MIS, accounting, internal audit and asset or liability management of the bank.

Rupali Bank

The government is also planning to assign a financial advisor for restructuring of another NCB, the Rupali Bank.

The advisor will be assigned for seven months with the task of structural reformation. Besides, he will also work out a plan for priviatisation of the bank.

He will also prepare a fact-based memorandum and will give the best solution to privatisation the bank.

Sonali and Janata Bank

In order to bring dynamism and improve the skills of the banks' management, six or seven local or foreign advisors will be appointed in both the Sonali and Janata.

According to the available statistics, at present, the share of the four NCBs in the banking sector is 47 per cent and private commercial banks are holding 53 per cent.

In 2002, the non-performing loan ratios of the NCBs, local commercial banks and foreign commercial banks were 38.4 per cent, 17.4 per cent and 2.7 per cent respectively.

The provisioning ratios of the NCBs, local commercial banks and foreign commercial banks were 40.5 per cent, 66.3 per cent and 172 per cent respectively.