A national daily reported that the Financial Institutions Division has recommended the Bangladesh Bank to review a petition for licence for Citizen Bank Limited despite a central bank veto. The central bank pointed out that two of the nine new banks established after 2013 – Farmers Bank and NRB Commercial Bank – were at risk because of scams. Besides, other new banks – Meghna Bank, Midland Bank, Modhumoti Bank, NRB Bank, NRB Global Bank, South Bangla Agriculture and Commerce Bank and Union Bank – could not comply with the licensing conditions like placing initial public offering and maintaining a certain ratio of agricultural loan disbursement.
A senior central bank official said that they were preparing for giving two new licences to establish People’s Bank Limited and Bangla Bank Limited following recommendations by the Finance Ministry. The licences have been sought by Bengal Group of Industries for Bengal Bank by apparel exporter Mohammed Iqbal for Citizen Bank and MA Quasem of Swandip, backed by leaders of ruling Awami League, for People’s Bank. On November 27, 2017, Finance Minister AMA Muhith said that the government was going to give licences to three more new banks.
Experts warned that awarding bank company licences to inexperienced operators would hurt the banking sector, which is already marred by loan scams, growing bad loans and hostile takeovers. The current crisis might become acute. Bad loans in the nine new banks increased by 86.18 per cent to Tk 509.10 crore in the first quarter of 2017-18. The establishment of new banks to embezzle depositors funds should not become a cottage industry. Financial sector of a country should be run professionally by the professionals. The wilful destruction of the banking sector by the government underpins its moral responsibility to protect the country’s economy and is thus completely unacceptable.
