Another bank falls by the wayside
As disheartening as it is to see the crisis unfolding at the National Bank Limited (NBL), we are hardly surprised by it. After its inception in 1983, the bank, first ever in the country's private sector, performed well for nearly three decades until 2013 when things started to go downhill because of various irregularities. The responsibility for its impending doom, however, cannot be placed entirely on the bank authorities as regulators, too, failed to do their part in preventing it.
According to an analysis by this daily, almost all the indicators regarding NBL's performance and financial health are in the negative territory. Its bad loans, for example, have spiralled out of control. As of September 2023, NBL's total bad loans stood at Tk 13,514 crore, the highest among the private banks in Bangladesh—a massive surge from Tk 489 crore at the end of 2013. At the same time, its capital shortfall stood at Tk 2,024.4 crore, and provisioning shortfall at Tk 13,797.5 crore.
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Insiders say that NBL's downfall began when Sikder Group gained a greater ownership of the bank in 2009. It made headlines frequently due to an array of highly irregular activities and banking rule violations, mostly committed by certain directors—that, too, despite having a Bangladesh Bank-appointed observer on the board since 2014. Thus, the bank deteriorated right before the central bank's eyes, yet the latter did not take any effective action.
All this is reminiscent of a pattern we have seen all too often in the banking sector, where powerful individuals often get away with various irregularities. In its latest move to salvage the NPL situation, the Bangladesh Bank reconstituted its board ousting three Sikder family members, including Ron and Rick Haque Sikder, who have been embroiled in their own controversies. Although this step has come too late, we hope some strict measures will follow soon to turn things around. It's also high time the government overhauled our banking sector, otherwise breaking this unending cycle of bad-governance-enabling-irregularities will remain a pipedream.
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