Transparency International Bangladesh has called for halting the implementation of the merger of banks.
The way it is proceeding, it can sidestep the main problem of the banking sector and give impunity to the people who are responsible for loan default and forgery, the anti-graft watchdog said in a press release issued today.
Recently, the central bank initiated steps to merge underperforming banks with stronger counterparts in order to save weak banks in the sector which creates anxiety and uncertainty among the banking people.
The TIB asserts that the lack of transparency in the bank merger process, particularly concerning the management of default loans and issues of accountability within weak banks burdened by default loans.
It essentially sidesteps the main problem of the crisis and gives impunity to the factions responsible for loan defaults and forgery.
Based on media reports, only one bank has shown interest in voluntary merger which suggests that the entire process has been imposed on them arbitrarily, which is a clear violation of the declared policies, said Dr Iftekharuzzaman, executive director of the TIB.
"How fair and reasonable is it to transfer the burden of default loans and forgeries to good banks without first assessing the assets and liabilities of the weaker ones?" he questioned.
"It appears that the ongoing actions are akin to prescribing paracetamol for cancer treatments," he added.
On one hand, the culture of loan defaults is exacerbated by shielding factions responsible for them and forgery under the guise of mergers, he said.
Contrarily, significant attempts are underway to compel good banks to digest weaker ones as a result of their success. This has fostered an atmosphere of anxiety and restlessness across the entire sector.
It is unrealistic to believe that simply merging banks, without ensuring effective accountability-based good governance to address the basic challenges in the banking sector, will resolve the problem or safeguard the interests of clients, he said.
The TIB criticised the provisions of the merger policy, which permit directors of underperforming banks to return to the board of the merged bank after a five-year break as well as the provision for the reappointment of top executives.
"This provision rewards the perpetrators behind the banking crisis with impunity rather than holding them accountable," the statement added.
