The central bank has approved three more private commercial banks.
These are People’s Bank, Citizen Bank and Bengal Bank.
With the new ones, the number of banks in Bangladesh will be 62.
Bangladesh Bank’s board of directors gave the banks the final nod in a meeting chaired by Governor Fazle Kabir on Sunday night, according to Abu Farah Mohammad Naser, an executive director of the central bank.
They will have to fulfil different conditions, including paid-up capital of Tk 5 billion, before getting licence, Naser added.
Jasim Uddin, the younger brother of Bengal Group Chairman Morshed Alam MP of the Awami League, is the proposed chairman of the Bengal Bank.
MA Quasem, an expatriate Awami League leader living in the US, is the proposed chairman of the People’s Bank.
Law Minister Anisul Huq’s mother Jahanara Huq’s name was proposed for the chairmanship of the Citizen Bank.
The central bank cleared Bangladesh Police Welfare Trust’s Community Bank on Oct 29 last year, six days after the then finance minister AMA Muhith agreed with many bankers and economists that Bangladesh’s banking sector has become “too large”.
Until then, the Awami League government cleared 10 private banks in as many years in power in its two previous tenures.
Besides the bank for police, a total of 58 government and private commercial banks and 34 non-bank financial institutions are operating in the country currently.
Though many bankers believe the number of banks in the country was already too large, the government gave licence to nine more in 2012. Muhith had earlier admitted that the banks were cleared on political considerations.
Later, the government cleared the Border Guard Bangladesh’s Simanto Bank.
The banking sector has been in discussions for huge loan scams in past few years. The banks cleared in 2012 are also struggling with irregularities and liquidity crisis.
As some of the new banks are already battling for survival, Muhith said in November 2017 that the government was approving three more commercial banks because “many are still out of banking services”.
The amount of bad loans totalled around Tk 1.4 trillion, or 15 percent of total loans disbursed, according to Bangladesh Bank data released in June.
The central bank recently came up with an easy way to show the mounting default debt issue look less bad than what it is now by relaxing the policy for loan write-off.
Banks can write off debts that have been marked bad for three years from their balance sheet. They had to wait for five years to write off bad debts until the new decision was announced on Feb 6.
WHY? ASKS SALEHUDDIN
File Photo; Salehuddin Ahmed
Former Bangladesh Bank governor Salehuddin Ahmed has expressed surprise at the approval of the three new banks amid criticism of the government for the condition of the banking sector.“I don’t know why the three banks have been approved. The banking sector’s condition is not so well. Most of the banks’ are not doing well. The new banks’ condition is worse.
“Overall, the banks can’t gain the people’s trust,” he told bdnews24.com.
“Everyone says there is no need for more banks for an economy like Bangladesh. Why more banks (have been approved)? I don’t know the answer,” he added.
He also said the approval of new banks on political consideration is curbing the central bank’s powers and autonomy.
“We saw in the past that approving banks on political consideration did not yield ay good outcome. But we are repeating the same mistake by pressuring the Bangladesh Bank,” Ahmed said.