3 new banks soon: Muhith

Finance minister AMA Muhith on Monday said the government is going to give licences for setting up three more new banks which experts observed would be illogical and disastrous for the already scam-hit banking sector. 
The discloser by Muhith came while he was answering to questions from the newsman after addressing a seminar on insurance sector in the capital.
Replying to a query whether the government is awarding two bank company licences for establishment of the proposed Bengal Bank and People’s Bank on political ground, Muihth said the government would issue three licences.
But he could not remember the name of the other proposed bank.
Muhith said logic for providing licences to new banks is that those can bring many ‘unbanked’ parts of the country into banking network.
In reply to another query, Muhith said those banks which are struggling would be merged with others.
Former Bangladesh Bank governor Salehuddin Ahmed pointed out that merging troubled banks with others without solving their problems would not bring any good for the banking sector already hamstrung by loan scams and growing defaulted loans.
According BB, a total of Tk 18,135 crore of loans became defaulted in the first nine months of 2017 pushing up the amount to Tk 8,0307.21 crore as of September 30, 2017 and exceeded the tolerable limit of nine per cent of the total outstanding loans.
Salehuddin said existing 57 banks are good enough to cover the ‘unbanked’ areas with diversifying their products, agent banks and digital devises.
He noted that the entry of new banks would be disastrous for the banking sector.
Despite severe criticism, the present government in 2012-13 awarded licences for establishment of nine banks on political consideration.
Two of them—NRB Commercial Bank and Farmers Bank—are already identified as risks to the financial sector by the parliamentary standing committee on finance during a meeting on 
October 29 because of scams and growing non-performing loans.
On Monday, Bangladesh Bank fired Farmers Bank managing director AKM Shamim after the bank, owned by former home minister Muhiuddin Khan Alamgir, failed to keep adequate liquidity.
Other new banks—Meghna Bank, Midland Bank, Modhumoti Bank, NRB Bank, NRB Global Bank, South Bangla Agriculture and Commerce Bank and Union Bank—are also struggling because of their inexperience in the banking business. 
It is reported that influential quarters had been lobbying at the fag end of the tenure of the Awami League-led government for licences for new banks.
Transparency International Bangladesh executive director Iftekharuzzaman said that embezzlement of funds from the banks by their directors and loan scams became a common practice nowadays. 

News Courtesy: www.newagebd.net