FE Today Logo

Kamal defends approval of new banks

Singles out soured loans as main problem

FE Report | February 19, 2019 00:00:00

Finance Minister A H M Mustafa Kamal said on Monday that he was not worried about the number of banks provided they follow rules and regulations.

"The number of banks is not a big matter -- what matters is whether they run following rules and regulations and can provide proper services to customers," the minister said.

His comments came a day after the central bank approved three more new private banks.

The minister was talking with reporters before meetings of the cabinet committee on public procurement and economic affairs at the Bangladesh secretariat.

With the approval of new banks and after completion of their licencing process, the number of banks in the country will reach 62.

Mr Kamal defended the Bangladesh Bank's decision, saying the central bank would not have approved the new banks unless there were needs for more banks, though he first said he had no detailed information about the approval of three banks.

Replying to a question, the minister said the paid-up capital of Bangladeshi banks is only Tk 4.0 billion, which is a small amount.

"The single branch of a bank abroad has capital and resources much higher than our 20 banks," he said.

The minister said the central bank has given permission for new banks conducting the demand assessment.

Mr Kamal hailed the decision for raising the new banks' paid-up capital to Tk 5.0 billion from the existing Tk 4.0 billion.

"It's a good decision. If the paid-up capital of banks is increased, the sector will get a big safety net."

He said the gradual increase in paid-up will be better for the banking sector.

About merger of banks, the minister said, if needed the banks will go for that.

Identifying classified loans as the main problem of the banking sector, he said the banks will be given formula on how they would lower the volume of soured loans.

The minister said the presence of high volume of non-performing loans contributes to the widening of the interest rate spread. "We have to lower the spread and also the rate of interest on loans."

He said a special audit will be carried out to find out the reasons behind rising non-perfuming loans.

The minister, after the meetings, told reporters that multimedia classrooms will be set up in many schools.

He said state-owned companies will be given priority while getting supplies of equipment for multimedia classrooms.

State-run Telephone Shilpa Sangstha has been selected for the task and the supplier will have to furnish a bank guarantee for ensuring timely completion of work and after sales services.

Mr Kamal said a British company has been appointed to conduct a desktop study on data obtained from a survey to check the presence of gas hydrant beneath the newly acquired areas in the Bay of Bengal.

Officials who attended the meetings said the committee approved eight procurement proposals involving Tk 17.42 billion.

The proposals include the procurement of urea fertiliser, wheat, and construction of multistoried residential flat for government officials.

[email protected]

Share if you like