Seventy-two per cent of the bankers think that the number of banks operating in the country should be reduced amid influential quarters’ lobbying for new banks at the fag end of the tenure of the current Awami League-led government, reveals a Bangladesh Institute of Bank Management research report.
The research report was released at a seminar on ‘Exploring merger and acquisition in the context of the banking sector of Bangladesh’ at the BIBM auditorium in the capital on Thursday.
A four-member BIBM team led by its professor and director Md Mohiuddin Siddique came up with the findings based on opinions of 285 bankers of 57 banks, five from each bank, above the rank of assistant vice-president.
Eleven per cent of the bankers, however, think that the number of banks in the country is reasonable and 17 per cent denied making any comment on the issue, the BIBM director said while presenting the research findings.
At present there are 57 scheduled banks and six specialised banks in the country.
The Awami League-led government in its 1996-2001 tenure had issued licences to 13 new banks and in the current tenure it issued nine new licences in 2012.
Awami League leaders and organisations like the police, Navy and Air Force are lobbying for bank company licences ahead of the next general elections scheduled for 2018.
The presentation of Mohiuddin Siddique on the banking sector also highlighted the challenges for merger of banks in the country.
The challenges include lack of corporate governance, hidden benefits of the board members, lack of capacity of the directors, political weakness and change of mentality.
BIBM director general Toufic Ahmad Choudhury presided over the seminar where Bangladesh Bank deputy governor SK Sur Chowdhury and former BB deputy governor Khondkar Ibrahim Khaled were present, among others.
Ibrahim Khaled said banks had turned into grocery shops due to low educational qualification of the sponsors of banks.
Speaking about newly amended provision in the bank companies act that allows four directors from a family, Khaled called on the banking professionals to speak loud against the provision.
The country’s small-scale banks think that any merger with big banks will result in non-existence for them but a significant number of mergers are taking place worldwide as part of the entities’ desire for becoming bigger, Khaled said.
Speaking about the Bangladesh Development Bank Limited’s issue, he said that two bad entities produced another bad entity.
SK Sur Chowdhury said that there were examples of mergers in developed and developing countries but the concept was a bit new in Bangladesh.
He also said that the central bank had preparation to deal with mergers and it had already prepared guidelines in this regard.
Toufic Ahmad said that there should be an ‘exit policy’ for those banks which will perform poorly.
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