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Bangladesh Bank approves three new banks

Economics Desk: The Bangladesh Bank building at Motijheel Mehedi Hasan/ Dhaka Tribune Bengal, People’s, Citizen each to meet Tk500cr paid-up capital requirement in six months Bangladesh Bank on Sunday approved three new commercial banks, bringing the number of scheduled banks in the country at 62. The banks are Bengal Commercial Bank, People’s Bank and Citizen ...

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Economics Desk: The Bangladesh Bank building at Motijheel Mehedi Hasan/ Dhaka Tribune

Bengal, People’s, Citizen each to meet Tk500cr paid-up capital requirement in six months

Bangladesh Bank on Sunday approved three new commercial banks, bringing the number of scheduled banks in the country at 62. The banks are Bengal Commercial Bank, People’s Bank and Citizen Bank.

The paid-up capital for each of the approved banks has been set at Tk500 crore, up by Tk100 crore applicable to other commercial banks.

The decision to issue Letters of Intent (LoI) was taken at a board of directors meeting at the Bangladesh Bank headquarters. The Bangladesh Bank Governor Fazle Kabir presided over the meeting.

“ The board meeting has decided to issue LoI to three banks after scrutinizing all required documents of the proposed banks,” Bangladesh Bank Executive Director Abu Farah Md Naser told reporters after the meeting.

“The paid-up capital of each bank must be Tk500 crore. The enhanced capital base has been set considering the size of the economy and interests of depositors.”

Naser said licenses to new banks will be issued soon after the proposed banks meet the requirements of enhanced paid-up capital criteria.

“They will get six-month time to comply with.”

Bengal Commercial Bank has been initiated by Bengal Group of Industries, a local manufacturer of plastic products. The group vice-chairman Jashim Uddin will act as the chairman of the bank.

MA Kashem, an AL leader in the US, is the chairman of the proposed People’s Bank, while Jahanara Huq, mother of Law Minister Anisul Huq, is the chairman of Citizen Bank.

On October 29, last year the central bank approved Community Bank Bangladesh and had also sent back proposals for three proposed banks due to lack of adequate documents to be for licenses.

Bangladesh Police Welfare Trust owns the Community Bank Bangladesh.

Economist and former finance adviser to a caretaker government AB Mirza Azizul Islam told the journalist that “There is no logic behind approving more banks. We should think of laws to force mergers for the existing ones, rather than establishing new banks.”

“The number of banks is already high,” he added.

The financial health of the nine banks, who got licences in 2013 is poor, with one of them currently on “life support,” a senior Bangladesh Bank official said.

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