New banks to join a saturated market

Though the number of banks in Bangladesh is more than those in its neighbouring countries, the government now considers giving permission for setting up new banks.

According to Bangladesh Bank statistics, at present the number of local and foreign banks is 47, whereas the number is 21 in Sri Lanka, 39 in Pakistan and 26 in Nepal.

Even Malaysia and the Philippines have only 26 banks each.

However, being a big economy India has 90 banks. There are also some regional banks there.

In Bangladesh, three successive governments in 1980s and 1990s allowed setting up new banks, but after 2001 no new bank was approved rather some were merged.

When the BNP came to power in 2001, there was severe pressure to give approval to new banks but the central bank managed to outmaneuver the attempts.

From 2001 till date, the BB received applications for 82 new banks, and of them, applications for 20 banks were submitted during the Awami League's present regime.

More applications are in the pipeline, and many are still lobbying for permission.

On July 12, 2005, the BB board okayed a new policy for setting up banks and branches of foreign banks. The BB also decided that no more permission will be given for setting up new banks given the country's economy and size of the money market.

After the Liberation War in 1971 there were only six banks in Bangladesh and all of those were state-owned.

Later, during the Ershad regime nine banks were set up in the private sector including the denationalised Pubali and Uttara banks from 1982 to 1987.

During the BNP regime, eight new banks were approved from 1992 to 1996.

Later, the Awami League-led government gave permission to 13 private banks during 1999-2001. After those no licence was given for opening new banks.

After the Awami League-led grand alliance assumed power for the second time in 2009, the process of allowing two more banks was initiated, putting forward various reasons in the favour of the move.

Twenty persons applied this time. Among the big shots, Awami League Presidium Member Mohiuddin Khan Alamgir has so far submitted applications twice.

Also the chairman of the parliamentary standing committee on public accounts, Alamgir submitted an application in April 2009 to set up SME Bank. Md Mojibar Rahman, MA Rashid and AHM Tajul Islam were mentioned as the directors of the proposed SME Bank.

In 2010, Alamgir filed another application for a new bank, The Farmers' Bank Ltd. Md Atahar Uddin and Ebadul Karim were proposed as the directors of the bank.

An application for setting up Modhumati Bank Ltd was submitted in 2010.

Awami League lawmaker Sheikh Fazle Noor Taposh is one of the directors of the proposed bank.

Other directors of the bank are Humayun Kabir and Sheikh Salahuddin.

National Professor Kabir Chowdhury, Prof Deen Mohammad and Prof Azizur Rahman have taken initiative for setting up Self Employment Bank.

The Daily Star, 29 July 2011