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WB asks govt to speed up NCB reforms

Suggests suspension of Rupali Bank share trading

REJAUL KARIM BYRON
The World Bank (WB) has asked the government to implement a 10-point action plan, which includes suspension of Rupali Bank's share trading, to expedite the reforms of nationalised commercial banks (NCBs).
Christine I Wallich, country director of the WB, in a letter last month expressed disappointment at the snail's pace of the reform process of the NCBs and asked the government to fix a deadline as to when it (government) wants to implement the 10-point action plan.
Mentioning the findings of a WB mission's report, Wallich in the letter pointed out that in the process of privatising Rupali Bank, the minority shareholders are the greatest risk area.
She, however, suggested offering to the minority shareholders a
price equal to either the price negotiated with the government or the average of the weekly share prices as quoted on the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) during the preceding six months.
The action plan has also suggested initiating a discussion on the government-funded Voluntary Retirement Scheme to assist in reducing staff prior to, or as part of, the sales procedure as far as privatisation of the NCBs is concerned.
It also asked to give the Working Group (WG), formed by the government to co-ordinate and expedite NCB reforms, full written authority to make any major changes in hiring, firing and compensation policies of the NCBs.
Wallich pointed out that the
consultants working on the
privatisation process of the NCBs are not being able to work, although the action plan asked to give the WG full written authority to the effect that it can implement the recommendations of the consultants on the banks' operational and financial restructuring.
The action plan also asked to revise the terms of reference of the consultant teams working in the three banks -- Agrani, Sonali and Janata -- to provide them with management and executive authority to implement operational restructuring and give them the authority to act as sales or financial adviser.
The boards of directors of the three banks have been suggested to be reconstituted in line with the criteria set by the Bangladesh Bank.
Wallich said, " If these measures are put in place, the government will be able to achieve the intended
outcome of resolving the governance problems, speeding up loan recoveries, and improving operational efficiency through staff and branch rationalising of these troubled NCBs."
"Conversely, if the government continues with the existing arrangement of not providing feedback for the consultants on their reports and recommendations, and not taking their advices seriously, time and money will be wasted and the NCBs will represent not only a drag on the banking sector but will also pose a major risk to the fiscal stance of the government," she added.