300 Bank branches in 2009

Banks continue to expand their branches this year to net new customers for low-cost deposits.

Despite a slowdown in the global financial sector, some 300 new bank branches will be added to the country's existing network in 2009, taking the tally to over 7,000, according to Bangladesh Bank (BB) data.

“We have agreed to permit opening of around 300 new branches in 2009, assessing the demand, mainly from the private banks,” a senior BB official told The Daily Star.

The total demand was much more than the permitted number, the official said.

As of December 2008, the number of total bank branches stood at 6,886.

The banking sector of Bangladesh comprises four categories of scheduled banks -- state-owned commercial banks (SCBs), state-owned development finance institutions (DFIs), private commercial banks (PCBs) and foreign commercial banks (FCBs).

These banks had a total of 6,717 branches as of December 2007, while the number was 6,562 and 6,402 in 2006 and 2005 respectively.

With new branches banks can collect millions in cheap deposits that are lent at higher rates, bankers said.

Even though they increasingly offer technology-driven products and automated teller machines (ATMs) in convenient places, banks still hope to lure customers to a physical branch.

According to BB data, total deposits of the banks in 2008 increased by 19.19 percent to Tk 256,127 crore from Tk 214,890 crore in 2007. The growth was 15.5 percent in 2007. Banks' deposit was Tk 186,060 crore in 2006.

Share of four SCBs -- Sonali, Janata, Agrani and Rupali -- is declining on the increasing presence of PCBs, BB data shows.

Deposits of 30 PCBs increased by 26.12 percent in 2008 compared to 8.44 percent by four SCBs.

The SCBs' share in deposits decreased from 35.2 percent in 2006 to 32.6 percent in 2007. On the other hand, PCBs' deposits in 2007 amounted to Tk 115,020 crore or 53.5 percent of the total industry deposits. PCBs' deposit was Tk 95,550 crore or 51.3 percent in 2006.

FCBs' deposits in 2007 rose by Tk 3,260 crore or 21.6 percent over the previous year. The DFIs' deposits in 2007 were Tk 11,560 crore against Tk 10,020 crore in 2006 showing an increase by 15.4 percent.

“We want to reach more rural and semi-urban population. Already we have more rural branches than urban ones,” said Muhammad A Rumee Ali, chairman of BRAC Bank that has got permission to open 15 branches in 2009.

Rumee Ali, also a former deputy governor of BB, said still the bankable people in the country are much lower compared to many countries.

He urged BB to look into the issue of urban and rural branches opening by banks.

The BB approves new branch opening based on a set criteria such as capital base, provision shortfall, corporate governance, foreign exchange management and disbursement of SME loan.

This year the central bank will not allow a bank to open more than three branches in Dhaka and Chittagong, the most concentrated areas. BB encourages banks to open more branches in rural areas.

Besides BRAC Bank, Islami Bank Bangladesh has been given permission to open a total of 15 branches this year.

Source: The Daily Star, February 22, 2009