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Banks' paid-up set to get raise by a quarter

LoIs for newly-approved banks by end of this week

Siddique Islam | February 25, 2019 00:00:00

The central bank is set to raise paid-up capital of scheduled banks to Tk 5.0 billion from the existing Tk 4.0 billion over the next two years, officials said.

"We're working on this issue in line with our top management's decision," a senior official of the Bangladesh Bank (BB) told the FE on Sunday.

He said the BB board has given its opinion in favour of jacking up the paid-up capital considering the size of the country's economy.

Under the decision, the relevant department of the BB is likely to issue an instruction to the banks that have the paid-up capital below Tk 5.0 billion.

Currently a total of 17 banks, including seven fourth generation private commercial banks (PCBs), do now have paid-up capital below Tk 5.0 billion, according to another central banker.

He also said the banks will have to meet the required amount either by increasing its capital base or issuing rights shares or floating initial public offerings (IPOs) within the timeframe.

And foreign banks will have to meet the capital requirement by injecting fresh funds from overseas, said the central banker.

He also said the new capital requirement will help consolidate the country's financial sector making it more resilient.

The newly-approved three private banks will have to comply with the new paid-up capital rule within the stipulated timeframe.

On February 17, the BB board approved the three private banks after securitising all relevant documents, the process of which began in 2017.

The central bank is likely to issue the Letters of Intent (LoIs) to the proposed banks by the end of this week after completing all official formalities.

The three approved banks are: Bengal Commercial Bank Limited, Peoples Bank Limited and Citizen Bank Limited.

Currently a total of 58 banks are operating across the country, of which nine are government-owned, 40 private banks and nine foreign banks.

Earlier on August 14, 2008, the BB had instructed all scheduled banks for doubling their paid-up to Tk 4.0 billion from Tk 2.0 billion by August 11, 2011.

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