Thousands of crores of money have been provided from the people's tax money as capital. However, no initiative or project for reform has been able to stop the irregularities and corruption in these government-owned banks. The process of looting money in the name of loans by those in power could also not be stopped.

Sonali, Janata, Agrani, and Rupali are the main state-owned commercial banks. The visible process of changing these banks' ownership structure and management began in 1986. That year, the state-owned Rupali Bank was converted into a company. It was listed on the country's stock market. The sale of shares ensured people's participation in the bank's ownership. Although it has been 38 years since the bank was listed on the stock market, it has not changed how it is managed. Instead, it is still being run in the same manner as other government banks. Like Sonali or Agrani Bank, the government also appoints the chairman and MD of Rupali Bank.

In 1992, an initiative was taken to reform the state-owned banks. At that time, the government provided a large amount of money through bonds and cash, claiming it was for capital restructuring and strengthening the financial foundation of the banks. However, the objectives of the reform initiative were later not implemented. Then, in 2004, another significant reform initiative was taken in the state-owned banks. The government launched the Enterprise Growth and Bank Modernization Project (EGBMP) with funding from the World Bank. The project's objective was to bring fundamental changes to the management system of the state-owned banks. At that time, international auditing firms conducted audits in all the banks. In 2007, Sonali, Janata, and Agrani banks were converted into public limited companies, and the powers of the boards and management authorities were also increased. However, these reforms also failed to play a role in preventing the irregularities and corruption in the banks. Instead, those appointed as Managing Director (MD) and Chief Executive Officer (CEO) were given greater powers and became more involved in irregularities and corruption. The powerful used them as tools to embezzle the bank's money in the name of loans.

According to data from Bangladesh Bank, as of September this year, the amount of non-performing loans (NPLs) in the four major state-owned banks — Sonali, Janata, Agrani, and Rupali — has reached BDT 1.1674 trillion. Almost 38 percent of the loans distributed by these banks have become non-performing. However, the situation has worsened further after September. By the end of November, the amount of non-performing loans in these banks has exceeded BDT 1.5 trillion, according to insiders. They say the NPL ratio in the four major state-owned banks will be at least 50 percent. Due to this high rate of non-performing loans, the capital shortfall in all four banks has intensified. If adequate provisions are made, all the banks will face significant losses by the end of the year.

In 2004, as part of the state-owned bank reform process, Syed Abu Naser Bakhtear Ahmed was appointed as the MD of Agrani Bank. Before this, he had served as the MD of Southeast and Prime Banks. Despite not having worked in any state-owned bank, he was appointed MD of Agrani Bank based on his qualifications. Later, after the interim government took over, Syed Abu Naser Bakhtear Ahmed was appointed as the Chairman of Agrani Bank.

When asked about the situation then, Syed Abu Naser told Bonik Barta, "I did not even apply for the MD of Agrani Bank position. The government and Bangladesh Bank appointed me on their own. As part of the state-owned bank reform process, the international giant KPMG was hired for auditing. My advisory team for bank management had two representatives from PwC. Within three years, we had improved all the indicators of Agrani Bank. It was from this success that in 2007, Agrani Bank, Sonali, and Janata Banks were also converted into public limited companies. In addition to being appointed as MD on a contract basis, my powers were increased, and I was also given the CEO responsibilities."

When asked if converting the banks into public limited companies brought benefits, Abu Naser replied, "Reform is an ongoing process. To keep up with the times, reforms need to be made. However, if there is no continuity after the reform, it will not bring any benefit. Until April 2010, I was the MD of Agrani Bank. At that time, all the bank's financial indicators were strong. However, after that, continuity could not be maintained. This is why Agrani Bank is in such trouble now. The implementation of the bank's good governance policies had stopped here. Without the goodwill of individuals, no institution can thrive. And if a person becomes all-powerful by misapplying the law, that bank will surely be in trouble."

As of September 30 of this year, the total amount of loans distributed by Agrani Bank was BDT 756.77 billion. Of this, BDT 268.91 billion was non-performing loans (NPLs), which account for 35.53 percent of the total loans distributed. By September, the state-owned bank had also written off BDT 56.09 billion non-performing loans. The bank's capital shortfall at that time amounted to over BDT 46.06 billion. By November, the bank's non-performing loans had exceeded BDT 300 billion. In this case, nearly 40 percent of the bank's distributed loans are now non-performing. The situation regarding provisions and capital shortfall has worsened further. Agrani Bank is borrowing money from the market to meet its daily transactions. Previously, other banks used to borrow thousands of crore taka from this state-owned bank.

During the long rule of the Awami League government, which lasted for over a decade and a half, the country's banking sector was the most looted. After the interim government took charge, Bangladesh Bank formed a task force to reform the banking sector. The committee has not yet submitted its report.

The Finance Division of the Ministry of Finance appoints the Chairman, Directors, and MDs of state-owned banks. This division, which the Sheikh Hasina government established, has faced criticism. According to the Banking Companies Act, the final authority to appoint an MD for any bank lies with Bangladesh Bank. However, in the case of state-owned banks, this power is limited. After the Financial Institutions Division finalizes the appointment of the MD, it is approved by the respective bank's board and finalized by Bangladesh Bank. Due to this dual governance in managing state-owned banks, there have been allegations that the scope for irregularities and corruption has increased.

On September 19, the Finance Division removed the MDs of six state-owned banks. Afterward, the appointment of MDs for five banks was finalized, but Rupali Bank remains without an MD. The bank has been without an MD for almost three months, leading to chaos. Despite several attempts, the government has been unable to appoint an MD for Rupali Bank. In this situation, questions about the government's capability to manage state-owned banks have started to arise.

The bank's financial situation is also relatively poor. As of September this year, the amount of non-performing loans (NPLs) in the bank reached 12,738 crore taka, which is 25.41 percent of the bank's total distributed loans. By that time, Rupali Bank was also facing a capital shortfall of BDT 29.32 billion. The situation worsened further after September. According to insiders, almost 30 percent of Rupali Bank's loans have fallen into the non-performing category.

After the mass uprising, Nazrul Huda, former Deputy Governor of Bangladesh Bank, was appointed as the Chairman of Rupali Bank. When asked about the bank's current situation, he told Bonik Barta, "For the three months before my appointment as Chairman, the position of Chairman of Rupali Bank was vacant. Then, for nearly three months, the MD position also remained vacant. A bank cannot run like this. According to the Banking Companies Act, no bank can have a vacant MD position for over three months. The appointment of an MD by the Financial Institutions Division is also illegal. This power belongs solely to Bangladesh Bank."

Nazrul Huda said, "The Banking Companies Act has many strict provisions. If those were followed, the country's banking sector situation would not have been so bad. It's not enough to have the law; there must also be the mentality to follow it."

At one time, Janata Bank was recognized as the best among the country's state-owned major banks. However, in the past one and a half decades, this bank has also been severely affected due to unlimited looting. As of September this year, the amount of non-performing loans (NPLs) in Janata Bank reached BDT 604.89 billion, almost 61 percent of the bank's total distributed loans.

According to insiders, Janata Bank's situation is even worse than what the central bank's data shows. According to the information presented to the bank's board, the non-performing loans in Janata Bank now stand at almost BDT 740 billion. More than 75 percent of the bank's distributed loans are now non-performing. The situation has reached such a level that the bank risks falling into a CRR-SLR (Cash Reserve Ratio-Statutory Liquidity Ratio) shortfall at any time.

According to information from Janata Bank, the bank has distributed loans totaling BDT 985.23 billion. More than half of these distributed loans, or BDT 499.59 billion, were taken by just five groups or families. Among these, the Beximco Group, owned solely by Salman F. Rahman, took BDT 250.8 billion. Additionally, the S. Alam Group took BDT 101.71 billion, Anontex Group took BDT 77.74 billion, Crescent Group took BDT 38.07 billion, and Orion Group took BDT 30.11 billion.

Soon after the formation of the Awami League government in 2009, political leaders, teachers with party ideology, bureaucrats, and intellectuals were appointed to the board of Janata Bank. Dr. Abul Barkat, a teacher at Dhaka University, was appointed as the bank's Chairman. The bank's funds loot continued until Sheikh Hasina's government was ousted on August 5. Insiders claim that the bank was looted with the collusion of the board of directors and management authorities. Janata Bank officials have stated that political influence played the largest role in this.

Until 2012, the "Hallmark" scam was the country's biggest banking scandal. The group had embezzled nearly BDT 40 billion from the state-owned Sonali Bank. In addition to Hallmark, there were many other small and large loan scandals at the bank. However, available information suggests that Sonali Bank's financial indicators are somewhat better than those of the other three state-owned banks. As of September, the amount of non-performing loans (NPLs) in the bank stood at BDT 166.23 billion, about 16 percent of the distributed loans.

When asked about the reasons behind the poor condition of state-owned banks despite reforms, the current Chairman of Sonali Bank, Mohammad Muslim Chowdhury, told Bonik Barta, "Although some reforms have taken place, there are still structural problems, along with a lack of individual integrity. The structural reforms in the state-owned banks in 2007 were not fully implemented. Subsequently, the continuity of the reforms was not maintained. According to the Banking Companies Act, state-owned banks were supposed to appoint their MDs based on competition in the market. But here, the Financial Institutions Division determines the appointment."

Muslim Chowdhury said, "To improve state-owned banks, a strong and honest board must be appointed. The board should be given full responsibility, including the appointment of the MD. The board's responsibility should be limited to policy formulation. The government must take immediate action if the board is involved in any irregularities. If the proper application of the law is ensured, the entire banking sector can recover."

In addition to the four major banks, there are two other state-owned commercial banks: Basic Bank and Bangladesh Development Bank. The situation in these two looted banks is also dire. These banks have a non-performing loan (NPL) rate of over 50 percent. There are also three specialized government banks under Bangladesh Bank: Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, and Probashi Kallyan Bank.

Speaking on condition of anonymity, the Chairman of a state-owned bank said, "In the current situation of the country, there is no need for so many state-owned banks. Only one bank can be kept for the government's treasury management. For the others, the government needs to take strict action. In this regard, a decision could be made to either privatize or merge these banks."