The Saudi government finally allows Bangladeshi banks to open branches over there to facilitate sending home remittances by expatriates, officials said.
Many bankers, however, say they would have to face tough competition with global leading banks in the Kingdom of Saudi Arabia (KSA).
"We have been pursuing long for opening branches of Bangladeshi banks in the KSA. The Saudi government has recently given their initial consent to opening branches of Bangladeshi banks," a high official of West and Central Asia section of the ministry of foreign affairs (MoFA) told the FE.
It has happened after long pursuasion by the government and the Bangladesh mission in Saudi Arabia, he added.
The Bangladesh mission in Riyadh most recently sent a letter to the foreign secretary for taking necessary action in this connection, he also said.
"We have sent the letter to the finance ministry for taking required action in this connechtion," he added.
"We have received the letter of MoFA on opening Bangladeshi bank branches in KSA. As a result, we are expecting to begin necessary steps shortly," a high official of the fiance ministry said.
The embassy of Bangladesh in the Saudi capital would like to suggest the authorities concerned to convince the interested Bangladeshi banks for submitting their applications for licences to set up their branches in Saudi Arabia without further delay, according to the letter.
Two high-powered teams of Saudi Arabia will visit Dhaka in the current and next month on different purposes. Discussions on the interested bank branches' licensing to operate in KSA will be held on priority basis, said one official.
Private bankers think that setting up bank branches in KSA will be a challenge for the private or state-owned banks. Because, any bank branch can't survive there through collecting remitance, they have to do other banking services, a senior banker said.
Currently, Bangladeshi banks are collecting remittances through banking arrangements, exchange houses and money-transfer companies.
Bangladesh is now one of the largest recipients of remittance. And the KSA has been the largest hub of foreign remittance into Bangladesh. The United Arab Emirates (UAE), Qatar, Oman, Bahrain, Kuwait, Libya, Iraq, Singapore, Malaysia, the US and the UK are also major sources of remittance inflow.
Bangladesh Bank (BB) figures show that remittance in the fiscal year 2015-16 stood at US$ 14.92 billion. Of the amount, a significant portion came from the oil-rich KSA.
Contacted, chairman of the Association of Bankers, Bangladesh (ABB) Anis A. Khan declined to make any comment due to his "stay outside the country".
"We have to study first to open up our bank branches in KSA. There is lot of bank branches there. It is absoultely difficult to become profitable," Vice- Chairman of the ABB and managing director of Islami Bank Abdul Mannan told the FE.
"We have to set up 10 branches in Riyadh and 5 in Jeddah if we want to go to KSA, which is quite impossible. Besides, it is not possible to be profitable," he added.
He, however, said Bangladeshi banks have long been collecting remitances from KSA through banking arrangements with different banks. They will become competitors if Bangladeshi bank branches open there.
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