Don\\\'t set \\\'aggressive\\\' profit targets, BB tells new PCBs

The central bank has warned the top management of nine new private commercial banks (PCBs) against setting 'aggressive' profit targets for ensuring discipline in the country's banking sector.
The caution was made at the first meeting of chairmen and managing directors (MDs) of the banks held in the Bangladesh Bank (BB) Wednesday with BB Governor Atiur Rahman in the chair.
The BB's warning came against the backdrop of alleged violation of some rules and regulations particularly in the area of single borrower exposure limit by a few banks, officials said.
The banks have been asked to comply with the existing rules and regulations relating to responsibilities of chairmen, board of directors and chief executive officers (CEOs) properly to ensure good governance in the sector.
The central bank also asked the banks to strictly abide by the existing core risk management guidelines for improving their efficiency.
The BB earlier identified six core risk areas in the country's banking sector. The risk factors are: credit, asset and liability, foreign exchange, information technology, internal control and compliance, and money laundering.
At the meeting, chairmen of the banks urged the central bank for relaxation of the branch expansion policy allowing them 2:1 ratio instead of the existing 1:1 for opening urban and rural bank branches for at least three years.
They also proposed that the bank branches located in 'B' category municipality areas could be considered rural branches.
They also requested the BB for allowing more bank branches in the capital Dhaka to facilitate their business.
"We've advised the banks to remain alert from the beginning for avoiding any risks," BB Deputy Governor S K Sur Chowdhury told reporters after the meeting.
The banks started their operations last year after completing all the formalities.
He also said the central bank will consider the pleas of the new banks for opening more branches in Dhaka.
"We'll also take decision on the proposal of 'B' category municipality bank branches to be considered rural ones after examination," the BB deputy governor noted.
He also said the central bank asked the banks to expedite their credit flow to small and medium enterprises (SMEs) and the agriculture sector.
Talking to the reporters, Chairman of South Bangla Agriculture and Commerce Bank Limited S M Amzad Hossain said the central bank has assured them of providing necessary policy support for expediting business activities of the new banks.
"We're offering lower interest rates on lending aiming to increase the credit growth to the private sector to attract clients," Mr Hossain said while replying to a query.
"Chairmen of the different banks applied to the BB to allow them 2:1 ratio instead of 1:1 for opening urban and rural bank branches to facilitate business growth," Managing Director and CEO of Modhumoti Bank Limited Mizanur Rahman told the FE.
He said the chairmen have also requested the central bank to consider the bank branches located at 'B' category municipality areas as rural ones.
Currently, some 56 commercial banks are running their business across the country.