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BB likely to place proposals for new banks in next board meeting

Siddique Islam | January 19, 2018 00:00:00

The central bank is likely to place proposals for a couple of new banks before the next meeting of its board of directors for consideration.

It is now scrutinising proposals by Bengal Bank and Peoples Bank, officials said.

"We're now examining the pros and cons of the proposals," a senior official of Bangladesh Bank (BB) told the FE Thursday.

He said the proposals will be included as agenda for the board meeting, likely to be held by the end of this month.

"It will depend on the high-ups of the BB if the board meeting to be held by the end of this month or not," another BB official said, however.

"We're working on the proposals in line with an advice by the Ministry of Finance (MoF)," he said, without elaborating.

Sources, however, said the department concerned is yet to be instructed to call the next board meeting.

"There are indications that more proposals for new banks may come at the eleventh hour," said the central banker.

Amid allegations that a foreign national might have involvement in one of the two proposed banks, officials involved in the process of scrutiny explained that the people having dual citizenship could become the sponsor directors of the banks, but there is no scope for foreign nationals.

Asked about the scope of allowing foreign direct investment in the new banks, the central banker replied in the negative and said that the BB is also scrutinising the issue closely.

The BB had earlier expressed its view against allowing any new bank, mentioning that the deteriorating financial health of many banks, especially the new nine banks, does not allow new banks in the sector.

The capital base of the nine fourth-generation private commercial banks (PCBs), which got licences in 2013, is not good. Two of the new banks are in chaotic condition, the BB said in its letter to the MoF earlier.

A ruling party lawmaker and owner of Bengal Group of Industries moves for the proposed Bengal Bank while a Chittagong-based businessman MA Kashem for the proposed Peoples Bank.

After the Awami League-led alliance government assuming office in 2009, nine banks have been given the permission on political consideration despite opposition by different quarters.

Currently, 57 banks are operating in the country.

Earlier on November 27 last year, Finance Minister AMA Muhith had told the reporters that the government in fact mulling over giving permission to three new banks.

"There are provisions for mergers and liquidation of banks. So, the existing banks can do that," he argued, replying to a question.

"There is still a huge unbanked area. We are not very advanced that way in banking," he said, after a function organised by Bangladesh Insurance Association at the Dhaka Club in the capital on the day.

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