9 new banks pressing BB for relaxing licence conditions

AKM Zamir Uddin | Published: 22:32, Mar 20,2017

 
 

A file photo shows pedestrians walking past the Motijheel branch of The Farmers Bank in Dhaka. Nine new scheduled banks have mounted pressure on Bangladesh Bank to withdraw many of the conditions, including expansion of banking in rural areas, under which they were given licences in 2012. — New Age photo

Nine new scheduled banks have mounted pressure on Bangladesh Bank to withdraw many of the conditions, including expansion of banking in rural areas, under which they were given licences in 2012.
To push for their demand, the banks came up with a set of proposals at a meeting with the BB at its headquarters in the capital Dhaka on November 21 last year.
The central bank provided licences to the nine banks on political consideration despite severe criticisms from different corners.
The nine banks are: Meghna Bank, Midland Bank, Modhumoti Bank, NRB Bank, NRB Commercial Bank, NRB Global Bank, South Bangla Agriculture and Commerce Bank, The Farmers Bank and Union Bank.
The owners of the banks have been pressurising the central bank to allow their banks to open two new branches in the urban area against one new rural branch.
The BB earlier asked all banks to set up one rural branch against one urban branch to speed up financial inclusion in the country.
‘The managing directors of the new banks at the meeting with the BB claimed that it was difficult to earn quick profit from the rural branches. They also said the majority of their rural branches have plunged into a loss-making situation, putting an adverse impact on their overall profits,’ meeting sources said.
The new banks also demanded that the BB allow them to set up more than one branch a year in the Dhaka city corporation area.
Banks are now allowed to set up one branch in a city corporation or municipal area a year in line with the central bank’s guidelines.
The new banks also have pressed the central bank to allow them to disburse 1.50 per cent of their outstanding loans as farm loans, according to a BB document.
The BB earlier asked the fourth generation banks to disburse at least 5 per cent of their total loans and advances as agriculture loans in a year.
The third generation banks have to disburse 2.50 per cent of their total loans as farm loans in a year.
The BB has recently asked banks to distribute at least 30 per cent of their farm loans through their own channel as some banks disburse their whole agriculture loans through their linkage namely non-governmental organisations.
At the meeting, the nine banks also demanded that the central bank give them a waiver from disbursing 30 per cent of their farm loans through their own channel saying that they did not have sufficient number of branches in the rural areas for doing the job.
The BB asked the nine banks to spend at least 10 per cent of their net profit in the interest of underprivileged people under their corporate social responsibility programme.
The new banks requested the central bank to withdraw the provision as such type of condition is not now imposed on older banks.
A BB official told New Age on Monday that the central bank might accept some of the demands made by the new banks as the owners of the banks continued to pressurise the central bank in this regard.
Most of the directors and chairmen of the nine new banks are directly involved with either the politics of the ruling Awami League or those of its allies.
The BB has recently detected huge anomalies in disbursing loans by some of the banks and the classified loans in the banks increased massively as a result of the wrongdoings.
The central bank appointed observers to The Farmers Bank and NRB Commercial Bank to save the banks from further corruption.
The defaulted loans in the nine banks increased alarmingly as they also disbursed significant amount of loans violating rules and regulations.
The defaulted loans in the nine banks increased to Tk 274 crore as of December 31, 2016 from Tk 44.44 crore as of December 31, 2015.
Former BB deputy governor Ibrahim Khaled told New Age on Monday that the central bank should have not given the licences to the nine banks considering the country’s business volume.
‘The nine banks’ demands are irrational and the central bank should take a strict stance on this matter,’ he said.
The new banks should go to the rural areas and disburse 5 per cent of their total loans as farm loans following the licensing conditions, Khaled said. 

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