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BB not against new banks, says governor

FE Report | January 30, 2018 00:00:00

Bangladesh Bank (BB) is not against allowing new banks, but it would depend on the decision by its board of directors, the central bank governor said Monday.

"We are not making a u-turn regarding allowing of new banks. At the same time, we will scrutinise such proposals and place those before the board," BB governor Fazle Kabir told journalists, replying to a question about allowing two more new private banks.

His response came during the release of the new monetary policy statement (MPS) for the January-June period of the current fiscal year at central bank's board room. "In this free market economy, no business can be prevented," he said.

As approached by the ministry of finance (MoF), the BB had earlier opposed allowing any new banks considering the number of existing ones and their financial conditions.

But the MoF again requested the central bank to consider the pending applications for the two new banks.

Another proposal for one more bank for Bangladesh Police would reach him shortly, said the governor.

Justifying his new stance, Mr Kabir said new banks could come in line with the private sector growth. "This is not unusual," he added.

"It is true that some new banks have faced capital shortage. The ownership has also changed hands. That can happen. But nothing has happened that could prevent granting permission to open new banks," he said.

Regarding the latest position of the forex reserve heist, the governor said the issue remained pending with the judicial system of the Philippines.

Out of US$81 million stolen from the BB's account with the New York Fed, he said the BB has already recovered $14.5 million and $1.2 million is set to be received by the central bank while a team of officials are scheduled to fly for the Philippines Monday for recovery of another $6.0 million.

Mr Kabir said the investigation report of the reserve heist was not made public to avoid impact on several other ongoing investigations in the Philippines and in the USA.

Replying to another query, the governor said actions will be taken against those who were making illegal transactions through mobile banking system.

"Stringent measures are underway to prevent channelling remittance through hundi instead of banking channel," he noted.

BB deputy governor S K Sur Chowdhury said the large loan restructuring facility offered to some businesses will continue. However, actions will be taken in line with the relevant circular against the businesses that availed the offer, but became defaulter again, he added.

"No change has been decided about the restructuring policy," he said.

Replying to another query, Mr Chowdhury said the central bank remained alert about the possibility of illegal transfer of money from the country. "Steps will be taken to prevent capital flight through banking channel," he added.

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