The board of directors of Bangladesh Bank (BB) has kept in abeyance a proposal to issue lincences for new private commercial banks (PCBs), officials said Wednesday.
The decision came at a meeting, held in the central bank Wednesday with the Bangladesh Bank (BB) Governor Atiur Rahman in the chair.
"The issue has been discussed but no decision was taken at the meeting," a BB senior official told the FE, adding that the central bank has provided a study report, along with the existing Bangladesh Bank Order and Bank Company Act 1991, to the directors for taking a concrete decision in this connection.
"The Board may take a final decision on setting up of new commercial banks in its next meeting which will he held next month," the central bank official stated.
The central bank has placed a study report to its Board meeting seeking a decision on issuing new lincences for setting up PCBs.
The study report was prepared, incorporating all necessary information including the growth of the country's banking industry, considering its population, another BB official said.
"The board will have to take a fresh decision on the issue as there is a bar to establishing new banks. The Board imposed the bar in 2005 considering the country's socio-economic condition," a central banker told the FE earlier.
Besides, the central bank has already finalised a fresh guideline, spelling out details that the intending sponsors will have to follow while filing applications for setting up new banks.
"We'll publish the guideline along with advertisement, inviting fresh applications from interested entrepreneurs to establish new banks, if the board gives its approval for allowing new PCBs to operate," the BB official added.
Earlier, Finance Minister AMA Muhith said issuing of licences for new banks is a "political decision" of the government, by-passing the reservation of the central bank over the move, in view of the country's banking sector being already "over-saturated".
"It is our political decision to issue licences for new banks in the country, despite reservation made by the BB," Mr. Muhith told economic reporters in Dhaka on July 24 last at a post-budget discussion on challenges of the new fiscal year.
Asked then whether the decision is aimed at favouring political leaders, the minister said, "it might be".
"We'll be guided by our board," BB Governor Atiur Rahman told reporters on July 30 last while replying to a query relating to the government's political decision to issue licences for new banks.
On June 29 last, the finance minister 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.
News Source: Financial Express
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