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Is there going to be an integration of irregularities and corruption in the banking sector?

by endroar
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Third, while the merger policy acknowledges the 'risk of dealing with bad bank defaults and other financial distress' as a result of bank mergers, there is no clear guidance on how that risk should be mitigated post-merger.

Section 8(5) of the policy only states, 'To ensure that the loans acquired from the transferor bank/finance company do not default, and to monitor the loans and take necessary measures by forming a separate unit/department for recovery of defaulted loans. After formation of the asset management company, the said defaulted loan/investment along with the collateral security taken against the loan/investment can be sold.'

The question is, on what grounds would the owner of a private bank want to take responsibility for the huge defaulted debt of another private bank? For any other reason, if the public-private bank accepts the responsibility of another bank's debt, the problem will be solved only by forming a 'separate unit for recovery of bad debts'? Sonali or Krishi Bank are not able to recover their own defaulted loans properly, then how will BDBL or Rakab recover their defaulted loans?

That being said, an asset management company will buy these defaulted loans. The question is, who will own this asset management company? That is, whose money will be bought these defaulted loans?

If this asset management company is formed under government ownership (Clause 4 of the draft Asset Management Company Act, 2020 states that it should be formed under 100% state ownership), then it will mean that by buying defaulted loans with public money, the defaulters will be exempted on the one hand, and the shareholders of the acquiring bank will be exempted on the other hand. to facilitate If government companies buy defaulted loans with public money, they will not be able to recover them, just as state-owned banks are unable to recover large amounts of defaulted loans.


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