BB board to decide on licences to new banks

Express (July 31, 2011)

The central bank will place a study report to its board of directors' next meeting seeking decision on issuing lincences for new commercial banks, officials said.

"We're now working to finalise the report with necessary information including the growth of banking industry considering the country's population," a senior official of the Bangladesh Bank (BB) told the FE Saturday.

He also said the latest situation of the banking industry in the neighbouring countries will be included in the report.

"The board will have to take a fresh decision on the issue as there is bar on establishing new banks. The board imposed the bar in 2005 considering the country's socio-economic condition," the BB official said without elaborating.

Talking to the FE, an executive director of the BB said the date of board meeting is yet to be finalised but it will take place shortly.

Besides, the central bank of Bangladesh has already finalised a fresh guideline, spelling out the details that the intending sponsors will have to follow while filing applications for setting up new banks.

If the board gives green signal on the issue, the central bank will publish the guideline along with advertisement inviting fresh applications from interested entrepreneurs to establish new banks, another BB official said.

"We'll run all our businesses relating to issuance of fresh licences for new banks in line with our board decision," he added.

Earlier, Finance Minister AMA Muhith said issuing of licences for new banks is a "political decision" of the government, brushing aside concerns of the central bank that the move is unnecessary as the banking sector is already "over-saturated".

"It is our political decision to issue licences for new banks in the country despite reservation made by the BB," Muhith told economic reporters in Dhaka on July 24 last at a post-budget talk on challenges of the new fiscal year.

Asked whether the decision is aimed at favouring political leaders, the minister said "it might be". He said it could be the last time the government was influencing the BB for issuance of new bank licences.

"We'll be guided by our board," BB Governor Atiur Rahman told reporters Saturday while replying to a query relating to the government's political decision to issue licences for new banks.

On June 29 last, AMA Muhith told Parliament that the government would invite applications from entrepreneurs willing to establish new banks and life insurance companies.

Currently, a total of 47 commercial banks are in operation in Bangladesh.