FINANCE Minister AMA Muhith on Wednesday told the media that country’s banking sector has become “too large,” adding that, “There are too many banks, too many financial institutions.”
It’s really a significant confession of an influential minister who himself allowed more than a dozen new banks to operate during his tenure. Finance Minister has finally understood that too many cooks spoil the broth. Presently, a total of 58 government and private commercial banks and 34 non-bank financial institutions are operating. In comparison to the size of country’s economy, the number of banks is alarmingly high.
Despite repeated warnings by the eminent economists, the government had given licence to several banks. And Muhith had admitted that the banks were cleared on political considerations. Except BGB’s Shimanto Bank, all other banks are now virtually crippled with irregularities and liquidity crisis.
We know, country’s banking sector has been passing through a “very bad” time due to billions of takas in loan scams. According to Bangladesh Bank data released in June, the amount of bad loans totalled around Tk 1.4 trillion. Some of the new banks are already fighting for survival. In November last year, the government approved three more commercial banks under the same consideration.
We are surprised that, the new banks were allowed at a time when all the old banks and financial institutions were unsettling the market over their poor performances. What is disturbing is that, instead of increasing the performance of existing banks the authorities gave focus on increasing the number of the banks. According to newspaper reports, Bangladesh Bank is currently sitting on more than 50 bank licence applications. That means, banking business has become a lucrative money-making business where nobody feels the need for accountability.
We want to thank the Finance Minister that he though late, admitted the ongoing crisis in this sector. There are more than enough banks in the country and it would be more prudent to reduce the number of banks. We do urge the government to think of laws to force mergers for the existing ones to save the banking sector which is now on the verge of collapse.
It’s really a significant confession of an influential minister who himself allowed more than a dozen new banks to operate during his tenure. Finance Minister has finally understood that too many cooks spoil the broth. Presently, a total of 58 government and private commercial banks and 34 non-bank financial institutions are operating. In comparison to the size of country’s economy, the number of banks is alarmingly high.
Despite repeated warnings by the eminent economists, the government had given licence to several banks. And Muhith had admitted that the banks were cleared on political considerations. Except BGB’s Shimanto Bank, all other banks are now virtually crippled with irregularities and liquidity crisis.
We know, country’s banking sector has been passing through a “very bad” time due to billions of takas in loan scams. According to Bangladesh Bank data released in June, the amount of bad loans totalled around Tk 1.4 trillion. Some of the new banks are already fighting for survival. In November last year, the government approved three more commercial banks under the same consideration.
We are surprised that, the new banks were allowed at a time when all the old banks and financial institutions were unsettling the market over their poor performances. What is disturbing is that, instead of increasing the performance of existing banks the authorities gave focus on increasing the number of the banks. According to newspaper reports, Bangladesh Bank is currently sitting on more than 50 bank licence applications. That means, banking business has become a lucrative money-making business where nobody feels the need for accountability.
We want to thank the Finance Minister that he though late, admitted the ongoing crisis in this sector. There are more than enough banks in the country and it would be more prudent to reduce the number of banks. We do urge the government to think of laws to force mergers for the existing ones to save the banking sector which is now on the verge of collapse.
