BB board decides to allow some more new banks
Fresh applications to be invited within 10 days
The central bank will invite fresh applications for setting up of new private commercial banks (PCBs) within the next ten working days.
Its board of directors approved Wednesday a proposal on issuing licences for new PCBs.
The decision to invite fresh applications was taken at a meeting of the Board, held in the central bank on the day with Bangladesh Bank (BB) Governor Atiur Rahman in the chair.
"We'll invite fresh applications from interested sponsors, through advertisements in the media, to set up new banks," a BB executive director told the FE after the meeting.
He said the Board has decided to allow some new banks, considering the country's overall economic activities, along with its population growth.
The Board approved draft guidelines with some amendments. Some new clauses have been added to the previous ones.
"No licence for establishing new banks have been issued in the last 10 years but the economic activities have expanded substantially during the period," the BB executive director said, while replying to a query.
On August 24 last, the Board kept in abeyance a proposal to issue licences for new PCBs.
The meeting did not specify the number of banks to be approved during the process.
Under the amendments, no tax and bank loan defaulter will be allowed as sponsor directors of the new PCB and the amount of non-refundable fee at the time of filing applications has been increased to Tk 1.0 million from Tk 0.8 million earlier.
On September 5 last, the central bank published the draft guidelines to set up new banks, imposing a restriction on the number of directors in their proposed board to 13.
The paid-up capital of a new commercial bank will have to be Tk 4.0 billion as required under Bank Company Act 1991, the new guidelines said.
"The initial minimum capital of Tk 4.0 billion shall be provided by sponsors of any proposed bank," the BB said in its guidelines, adding that the bank shall issue public shares within three years from the date of commencement of the banking business.
"Public issues shall be, at least, equal to the amount of the sponsors' share capital," it added.
The capital base of the existing commercial banks comprise paid-up and reserve, amounting to a total of Tk 4.0 billion, while a minimum of Tk 2.0 billion has been added as in paid-up capital in the proposed capital base of a new PCB.
The minimum shareholding stake of each sponsor will be Tk 10 million, instead of the existing Tk 2.5 million and the maximum will be 10 per cent of the proposed bank's total share capital, according to the guidelines.
"This ceiling of 10 per cent applies to an individual, company or family member, either personally or jointly or both," it added.
"Family" is defined herewith to include spouse, father, mother, son, daughter, brother and sister of the individual or anyone dependent on that individual.
"The number of members of the board of directors shall be restricted to 13," the guidelines said, adding that the Chief Executive Officer (CEO) of the proposed bank shall have at least 15 years' experience in the banking profession.
Biographical reports and proof of citizenship for each director, CEO or MD and heads of operation, credit, finance, risk management, internal control, and information technology (IT), along with a feasibility report on the proposed banks, will have to be submitted to the central bank.
A new bank has to ensure financing, at least, 5.0 per cent of its total lending to the agricultural sector or as per instructions issued by the central bank from time to time, according to the guidelines.
"We've taken the latest move aiming to ensure food security through augmenting flow of farm credit disbursement across the country," another BB official told the FE.
Currently, all PCBs and foreign commercial banks are setting their agriculture credit disbursement target, at least, at 2.5 per cent of their total loan portfolios.
Relating to the branch expansion policy, the guidelines said the ratio of urban and rural bank branches has to be 1:1 or as per instruction issued by the BB from time to time.
On June 29 last, Finance Minister AMA Muhith told Parliament that the government would invite applications from the sponsors willing to set up new banks and life insurance companies.
Currently, a total of 47 commercial banks are in operation in Bangladesh.
Fresh applications to be invited within 10 days
The central bank will invite fresh applications for setting up of new private commercial banks (PCBs) within the next ten working days.
Its board of directors approved Wednesday a proposal on issuing licences for new PCBs.
The decision to invite fresh applications was taken at a meeting of the Board, held in the central bank on the day with Bangladesh Bank (BB) Governor Atiur Rahman in the chair.
"We'll invite fresh applications from interested sponsors, through advertisements in the media, to set up new banks," a BB executive director told the FE after the meeting.
He said the Board has decided to allow some new banks, considering the country's overall economic activities, along with its population growth.
The Board approved draft guidelines with some amendments. Some new clauses have been added to the previous ones.
"No licence for establishing new banks have been issued in the last 10 years but the economic activities have expanded substantially during the period," the BB executive director said, while replying to a query.
On August 24 last, the Board kept in abeyance a proposal to issue licences for new PCBs.
The meeting did not specify the number of banks to be approved during the process.
Under the amendments, no tax and bank loan defaulter will be allowed as sponsor directors of the new PCB and the amount of non-refundable fee at the time of filing applications has been increased to Tk 1.0 million from Tk 0.8 million earlier.
On September 5 last, the central bank published the draft guidelines to set up new banks, imposing a restriction on the number of directors in their proposed board to 13.
The paid-up capital of a new commercial bank will have to be Tk 4.0 billion as required under Bank Company Act 1991, the new guidelines said.
"The initial minimum capital of Tk 4.0 billion shall be provided by sponsors of any proposed bank," the BB said in its guidelines, adding that the bank shall issue public shares within three years from the date of commencement of the banking business.
"Public issues shall be, at least, equal to the amount of the sponsors' share capital," it added.
The capital base of the existing commercial banks comprise paid-up and reserve, amounting to a total of Tk 4.0 billion, while a minimum of Tk 2.0 billion has been added as in paid-up capital in the proposed capital base of a new PCB.
The minimum shareholding stake of each sponsor will be Tk 10 million, instead of the existing Tk 2.5 million and the maximum will be 10 per cent of the proposed bank's total share capital, according to the guidelines.
"This ceiling of 10 per cent applies to an individual, company or family member, either personally or jointly or both," it added.
"Family" is defined herewith to include spouse, father, mother, son, daughter, brother and sister of the individual or anyone dependent on that individual.
"The number of members of the board of directors shall be restricted to 13," the guidelines said, adding that the Chief Executive Officer (CEO) of the proposed bank shall have at least 15 years' experience in the banking profession.
Biographical reports and proof of citizenship for each director, CEO or MD and heads of operation, credit, finance, risk management, internal control, and information technology (IT), along with a feasibility report on the proposed banks, will have to be submitted to the central bank.
A new bank has to ensure financing, at least, 5.0 per cent of its total lending to the agricultural sector or as per instructions issued by the central bank from time to time, according to the guidelines.
"We've taken the latest move aiming to ensure food security through augmenting flow of farm credit disbursement across the country," another BB official told the FE.
Currently, all PCBs and foreign commercial banks are setting their agriculture credit disbursement target, at least, at 2.5 per cent of their total loan portfolios.
Relating to the branch expansion policy, the guidelines said the ratio of urban and rural bank branches has to be 1:1 or as per instruction issued by the BB from time to time.
On June 29 last, Finance Minister AMA Muhith told Parliament that the government would invite applications from the sponsors willing to set up new banks and life insurance companies.
Currently, a total of 47 commercial banks are in operation in Bangladesh.