The government has given a fresh timeline and action plan to the International Monetary Fund (IMF) pledging to complete reforms in the nationalised commercial banks (NCBs) and the National Board of Revenue (NBR).

It will issue an information memorandum for the public to bring Rupali Bank to the point of sale by the middle of January next year. Rupali's stocks will be delisted and the current shareholders of the bank compensated.

The government made the commitment to the IMF mission on the Poverty Reduction and Growth Facility (PRGF) Arrangement, that had been ip Dhaka between October 9 and October 26.

A finance ministry official, preferring anonymity, said, "The government will issue the information memorandum of the Rupali Bank by January and select a strategic partner for its divestment through competitive bidding." About divestment of other NCBs, the official said it is too early to say what will happen; everything will be known when the time comes.

Under the operationalisation of NCB resolution strategics, Rupali’s non-performing loans will be placed into a special segregated account prior to divestment until a framework is developed and implemented to recover these loans, possibly through use of an asset management policy.

A ’fit and proper' test for strategic investors will be in force and die desired ownership structure of the divested bank clarified. The strategic partner to be selected through competitive bidding will acquire a substantial share of the new bank's equity, while a financial stake may be held by the Asian Development Bank. Sources said a member of the Saudi Royal family and famous banks of many countries have expressed interest to buy stakes of Rupali Bank. A local vested group is also leaving no stone unturned to take over the ownership of the bank. But finance ministry officials said they would see to it that the divestment process is completed in a transparent manner.

Safeguarding the integrity of the divestment process is an overriding concern in the light of the governance issues in the NCBs and their poor financial condition, the government told the LMF mission.

The government will issue information memoranda for the public to bring Agrani and Janata banks to the point of sale by December 2005 and December 2006.

A financial advisor will be appointed to the Agrani Bank by May 2005 and to the Janata Bank by June 2006 to bring them to the point of divestment.

Boardrooms of the four NCBs will be reconstituted and the Bangladesh Bank's ’fit and proper' test for board membership applied by June 2005, ensuring that at least two board members have relevant banking experience.

As for the Sonali Bank, the government aims to contain the biggest NCB's future losses by restricting the bank's lending activities and overhauling its operations to the point where a minority shareholding can be divested.

"Timelines for the divestment plan have been set, including for corporatisation, the appointment of sales advisors, the treatment of nonperforming loans, feasible methods for recapitalisation and resolution of outstanding legal issues including those related to human resource policies and foreign ownership," the government told the IMF mission.

To reform the NBR, the government will complete the merged audits under the Large Taxpayers' Unit (ITU) system for income tax and VAT for the 100 largest VAT filers by April 2005.

The government will also have to approve the operations manual of the ITU for VAT and merge the auditing function of the ITU for income tax and VAT in the ongoing Third Review of the PRGF Arrangement.