The Bangladesh Bank has approved a new bank for the police, but rejected three other applications.
Once Bangladesh Police Welfare Trust’s Community Bank goes into operation, the number of banks in in the country go up to 59.
The central bank’s board of directors approved the trust’s application for licence in a meeting chaired by Governor Fazle Kabir on Monday.
The three other banks that were refused permission to start operation are Bengal Bank, People’s Bank and Citizen Bank.
Bangladesh Bank spokesman Serajul Islam told bdnews24.com after the meeting that the three banks were denied licence for different reasons.
The directors proposed for Bengal Bank have tax-related cases against them, Serajul said.
Jasim Uddin, the younger brother of Bengal Group Chairman Morshed Alam MP of the Awami League, was the proposed chairman of the bank.
The central bank believes the wealth statement submitted by MA Quasem, an expatriate Awami League leader living in the US and the proposed chairman of the People’s Bank, is not proper, according to the Bangladesh Bank executive director.
Citizen Bank’s application lacked the papers required for the licence, Serajul said.
Law Minister Anisul Huq’s mother Jahanara Huq’s name was proposed for the chairmanship of the bank.
The central bank decision came six days after Finance Minister AMA Muhith agreed with many bankers and economists that Bangladesh’s banking sector has become “too large”.
The Awami League government has cleared 10 private banks in as many years in power.
A total of 58 government and private commercial banks and 34 non-bank financial institutions are operating 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 last year 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.
IMF Executive Director Subir Vithal Gokarn expressed concerns over the bad loans during a meeting with Muhith on the sidelines of the annual IMF-World Bank meetings around three weeks ago.
Muhith said he told the IMF official that he would make a report before this government ends its term so that the next one can take effective steps to address the issue.