Special Correspondent :
Analysts voiced opposition on Monday to the central bank’s nod to three new banks bowing down to pressure from the government high-ups.
They said that the current crisis in the banking sector might become acute because of giving new banking licences under political consideration.
The new banks–Bengal Bank, People’s Bank and Citizen Bank– have got approval at the meeting of Board of Directors of Bangladesh Bank (BB) totalling the number of banks to 62 in the country.
AL lawmaker Morshed Alam initiated the Bengal Bank, MA Kashem, an AL leader in the US, is the chairman of the People’s Bank, while Jahanara Huq, mother of Law Minister Anisul Huq, is the chairman of Citizen Bank.
“Giving licences to new banks is unreasonable and undesirable, given the present situation of the banking sector and size of the economy,” Dr AB Mirza Azizul Islam Islam, former finance adviser to the caretaker government, told The New Nation yesterday
He said, “It is unreasonable in a sense that the number of banks is already high in the country, considering the country’s business activities and overall investment. BB should also consider the current messy situation prior to approve new banks.”
Dr AB Mirza Azizul Islam further said most of the banks riddled with irregularities and bad governance are failing to perform properly. The former finance minister also admitted the banking crisis suggesting mergers for falling banks.
He also mentioned that most banks are also reeling under liquidity crisis amid falling deposit growth. In this context, new banks may face uneven situation in mobilizing deposits and thereof invite undesirable consequences in the whole banking sector.
When asked, Dr AB Mirza Azizul Islam said, the government in previous occasion provided new bank licences under political consideration. But, the decision proved wrong when new ones, including Farmers Bank, failed to perform properly. Their failure has already put the banking sector under a great risk.
“The decision to approve more banks under political consideration will aggravate the situation further,” he added.
Last year, the BB turned down the Finance Ministry’s proposal for giving licences to new banks on the grounds of deteriorating financial health of many banks, especially the new ones.
Even, the new banks could not comply with the licensing conditions like placing initial public offering and maintaining certain ratio of agricultural loan disbursement.
The BB provided licences to the nine banks in 2013. Many of the sponsors of the fourth generation banks have direct linked either with the AL or its allies.
“It is not the right time to have more banks when the banking sector has undergone through indiscipline and irregularities,” Dr Salehuddin Ahmed, former Bangladesh Bank (BB) Governor, told The New Nation yesterday.
He said the central bank should restore order in the banking sector first and then think of new banks. So, the BB’s move would be detrimental to the banking industry.
“Approving new banks is totally unacceptable when too many banks are already in operation,” said Dr Khondkar Ibrahim Khaled, former deputy governor of the central bank.
He said, even the former finance minister admitted the truth, but interestingly recommended the central bank for approving new banks bowing down to pressure from powerful quarters.
“BB approved three new banks when the country’s whole banking sector in disarray owing to bad governance and soaring non-performing loans. “So, the new entrances will have to face tough challenge while their debut in the country’s banking sector,” cited Dr Ibrahim Khaled.
At the end of September last year, total non-performing loans stood at Tk 99,370 crore, which was 11.45 per cent of the total banking sector’s outstanding loans.
“BB approved new banks to fulfil the government’s political wish. In 2013, it also approved nine new banks following the government’s desire. But their conditions have already worsened. The central bank should consider the issue before allowing any new bank,” Dr Ahsan H Mansur, Executive Director of the Policy Research Institute, told The New Nation.
Analysts voiced opposition on Monday to the central bank’s nod to three new banks bowing down to pressure from the government high-ups.
They said that the current crisis in the banking sector might become acute because of giving new banking licences under political consideration.
The new banks–Bengal Bank, People’s Bank and Citizen Bank– have got approval at the meeting of Board of Directors of Bangladesh Bank (BB) totalling the number of banks to 62 in the country.
AL lawmaker Morshed Alam initiated the Bengal Bank, MA Kashem, an AL leader in the US, is the chairman of the People’s Bank, while Jahanara Huq, mother of Law Minister Anisul Huq, is the chairman of Citizen Bank.
“Giving licences to new banks is unreasonable and undesirable, given the present situation of the banking sector and size of the economy,” Dr AB Mirza Azizul Islam Islam, former finance adviser to the caretaker government, told The New Nation yesterday
He said, “It is unreasonable in a sense that the number of banks is already high in the country, considering the country’s business activities and overall investment. BB should also consider the current messy situation prior to approve new banks.”
Dr AB Mirza Azizul Islam further said most of the banks riddled with irregularities and bad governance are failing to perform properly. The former finance minister also admitted the banking crisis suggesting mergers for falling banks.
He also mentioned that most banks are also reeling under liquidity crisis amid falling deposit growth. In this context, new banks may face uneven situation in mobilizing deposits and thereof invite undesirable consequences in the whole banking sector.
When asked, Dr AB Mirza Azizul Islam said, the government in previous occasion provided new bank licences under political consideration. But, the decision proved wrong when new ones, including Farmers Bank, failed to perform properly. Their failure has already put the banking sector under a great risk.
“The decision to approve more banks under political consideration will aggravate the situation further,” he added.
Last year, the BB turned down the Finance Ministry’s proposal for giving licences to new banks on the grounds of deteriorating financial health of many banks, especially the new ones.
Even, the new banks could not comply with the licensing conditions like placing initial public offering and maintaining certain ratio of agricultural loan disbursement.
The BB provided licences to the nine banks in 2013. Many of the sponsors of the fourth generation banks have direct linked either with the AL or its allies.
“It is not the right time to have more banks when the banking sector has undergone through indiscipline and irregularities,” Dr Salehuddin Ahmed, former Bangladesh Bank (BB) Governor, told The New Nation yesterday.
He said the central bank should restore order in the banking sector first and then think of new banks. So, the BB’s move would be detrimental to the banking industry.
“Approving new banks is totally unacceptable when too many banks are already in operation,” said Dr Khondkar Ibrahim Khaled, former deputy governor of the central bank.
He said, even the former finance minister admitted the truth, but interestingly recommended the central bank for approving new banks bowing down to pressure from powerful quarters.
“BB approved three new banks when the country’s whole banking sector in disarray owing to bad governance and soaring non-performing loans. “So, the new entrances will have to face tough challenge while their debut in the country’s banking sector,” cited Dr Ibrahim Khaled.
At the end of September last year, total non-performing loans stood at Tk 99,370 crore, which was 11.45 per cent of the total banking sector’s outstanding loans.
“BB approved new banks to fulfil the government’s political wish. In 2013, it also approved nine new banks following the government’s desire. But their conditions have already worsened. The central bank should consider the issue before allowing any new bank,” Dr Ahsan H Mansur, Executive Director of the Policy Research Institute, told The New Nation.
