Seven months after the government announced a Tk 2,000 crore “recapitalisation” of state-owned banks, the financial institutions have started asking for fresh money from the government. This time their demand is much higher -- a little over Tk 20,000 crore -- than what they were given in the budget for this year.

Only in June this fiscal year, the government had announced the “recapitalisation”. Before that, Tk 14,505 crore had already been given to them since the Awami League government came to power in 2009.  Sadly, as predicted, all the money has gone down the drain, or to be exact in the pockets of corrupt and politically connected people, and the banks are once again asking for another bail-out.

Dr Ahsan H Mansur, executive director of independent think-tank Policy Research Initiative, has aptly put down their plea, comparing their behaviour to that of a spoiled brat who throws money in the air every time and then asks his father for more.

Only, in this case the father -- the government -- will take the money from the tax payers' pockets and hand it out liberally as it has done over and over again in the past.

There has been no effort to chastise the banks whose money has been politically plundered in thousands of crores with no action taken.

Many would like to point out the recent massive $14 billion Indian bank recapitalisation plan under the Indrodhanush Recapitalisation Scheme, arguing that our demand for recapitalisation is really trivial in comparison.

In doing so, they would hide facts under piles of lies and misinformation. First of all, although the underlying reason for recapilisation of the Indian banks and the banks here are the same -- accumulation of bad loans -- the cause of the loans going bad is very different.

The Indian banks had heavily invested in mega infrastructure projects and as the projects got stuck in bureaucratic tangles, their loans turned bad.

But this is not the case in Bangladesh. Here the banks did not make any genuine investment on any business model. Instead, their money was simply plundered using fake projects. Those who siphoned out the money are politically connected and the schemes were hatched in connivance with or in full knowledge of the bank boards.

Secondly, the Indian Indrodhanush scheme comes with a reform package under which the banks will have to implement a series of reforms that includes improving due diligence, allowing specialised monitoring for loans above 2.5 billion rupees, limiting the number of lenders that can group together to disburse loans and better handling of bad loans.

Finally, India needed more lending with its growth in slide and the state banks are important players here as they account for more than two-thirds of India's banking assets. In Bangladesh, the state banks account for a much lesser one-fourth of all the banking assets.

In our case, the recapitalisation was also never packaged with any reform plan. Fresh money was thrown in just to make more funds available to be skimmed off. There was no transparency, no liability, no accountability.

We have seen massive corruption in banks like Basic, Sonali and Janata. Not a single board member or chairman was charged or jailed.

Take the instance of Basic Bank from which Tk 4,500 crore was siphoned off after this government came to power. Abdul Hye Bacchu, a politically connected man, was its chairman and yet he was not touched by the Anti-corruption Commission (ACC) or any other organisation.

It was such a blatant case of political power in play that the High Court, in November, 2017, rebuked the ACC for foot dragging and showing weaknesses in investigating the Basic Bank scam.

The court observed that the ACC applied “pick and choose” policy in this case as they were yet to arrest “any of the beneficiaries of the loan scam”.

In case of the Janata Bank scam, some little-known companies, belonging to the same person, were given loans to the tune of Tk 5,500 crore. None of the board members or the chairman is held responsible for the scam although they sanctioned the loans.

The same has happened in case of Sonali and other banks as well. And the contagion has spread to private banks as well, as we have seen in the cases of Farmers Bank or NRB Commercial Bank. All the actions taken have been against the managing directors but the bank chairmen were left to walk away scot free although there is sure and certain proof of their involvement in the scams. None of the chairmen's stocks were confiscated.

Because of such an extremely liberal view of the banking operation, the country's banking system is now in a deep crisis. Giving banks money without any fundamental reforms will only facilitate more scams.

“If we want to stop further money from being plundered, we need to immediately cap lending of the state-owned banks,” Ahsan Mansur said. “They don't have the capacity for due diligence for lending and are captured by vested groups. These banks should only collect deposits and lend in the interbank market so that public money is no longer plundered.”