Shakhawat Hossain
The Financial Institutions Division has sought the consent of the Prime Minister’s Office for banking licence for proposed Citizen Bank while the Bangladesh Bank is reportedly under pressure for three more banking licences before the next general elections although the sector is already overcrowded with 57 banks and mired by scams.
Division officials said that they sought the consent in the last week of February because of a central bank prerequisite for the issuance of banking licence to the proposed Citizen Bank. Financial Institutions Division secretary Eunusur Rahman said that the division had to comply with the directive of the higher-up.
He, however, said that the central bank was the ultimate authority to issue a banking licence.
The Bangladesh Bank had turned down a previous recommendation made by the division for granting licence to Citizen Bank, proposed by export oriented readymade garment businessman Mohammad Iqbal, also kin of law minister Anisul Huq.
Mohammad Iqbal told New Age on Saturday that he was expecting the licence this time as he had been persuading the Bangladesh Bank since 2011. Asked if he is a relative of the law minister, Iqbal said the law minister had sympathies for him.
Division officials expected that the Prime Minister’s Office would give the consent to the establishment of the Citizen Bank soon.
In December 2017, the Prime Minister’s Office gave consent to the for establishment of two banks by private entrepreneurs amid warning by experts that entry of new banks would be disastrous for the already scam-hit and overcrowded banking sector.
The proposed banks are Bengal Bank proposed by Bengal Group of Industries and People’s Bank of MA Quasem of Swandip, backed by Awami League leaders.
Officials said that the Bangladesh Bank was under pressure to award banking licenses to at least few from a dozen of applicants although its officials continued opposing the establishment of new banks.
On November 27, 2017, finance minister AMA Muhith said that the government was going to give licences for setting up three more banks. He, however, did not name the banks.
The entry of new banks would not be helpful for keeping discipline in the already undisciplined banking sector, said a position paper of the central bank on the establishment of new banks drafted in December 2017.
Central bank officials pointed out that two of the nine new banks established after 2013 — Farmers Bank and NRB Commercial Bank — were at risk because of scams.
Besides, other new banks — Meghna Bank, Midland Bank, Modhumoti Bank, NRB Bank, NRB Global Bank, South Bangla Agriculture and Commerce Bank and Union Bank — could not comply with the licensing conditions like placing initial public offering and maintaining certain ratio of agricultural loan disbursement, said the position paper.
Experts said that the loan scams in the new banks in addition to growing defaulted loans of over Tk 80,000 crore were warning signals to the banking sector.
At the Regional Banking Conference organised by the Bangladesh Institute of Bank Management in Dhaka in the past week it was revealed that defaulted loan in the country’s banking sector crossed double digit mark, compared to 7 per cent in India and 2 per cent in Nepal.
Former Bangladesh Bank governor Farashuddin Ahmed in his paper titled ‘A Review of the Activities and Performance of the Banking Sector of Bangladesh’ said that the high non-performing loan remained a key issue of concern for the banking sector.
The non-performing loan ratio would go up to 17 per cent if rescheduled or restructured loans are included, he said.
Bangladesh Institute of Bank Management supernumerary professor Md Yeasin Ali said that the Bangladesh Bank should make public the defaulters’ identities to tackle the non-performing loans.
In China, air and train tickets are not sold to the defaulters as punitive measures of the government and to shame the defaulters, he said.
- Courtesy: New Age Mar 11, 2018
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