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Monday, April 9, 2012
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Nod to 6 more new banks

Central bank rules out political consideration

L-R: HM Ershad, Union Bank; MK Alamgir, Farmers' Bank; Fazley Noor Taposh, Modhumati Bank; HN Ashikur Rahman, Meghna Bank.

The Bangladesh Bank yesterday gave the go-ahead for six new private banks, all linked with either lawmakers of ruling Awami League and Jatiya Party or influential persons.

BB Deputy Governor Sitangshu Kumar Sur Chowdhury told reporters that the new banks were approved after “proper evaluation” and without any political consideration.

He said those who submitted applications for setting up the banks are all citizens of Bangladesh and their political identities had nothing to do with the approval.

One of the six is Union Bank Ltd. HM Ershad, former military dictator and chief of AL's ally Jatiya Party, is a director of the bank and JP International Affairs Secretary Golam Masih is among its 19 shareholders. Shahidul Alam has been named the chairman.

Prime Minister Sheikh Hasina's close relative and AL lawmaker Fazley Noor Taposh is among the 38 sponsor shareholders of Modhumati Bank Ltd. Humayun Kabir is its proposed chairman.

There are 22 sponsor shareholders of Meghna Bank. Prominent among them are HN Ashikur Rahman, a ruling party MP from Rangpur-5 constituency, and Nasrul Hamid, AL lawmaker from Dhaka-3.

The 13 directors of Farmers' Bank Ltd include Mohiuddin Khan Alamgir, AL lawmaker and a parliamentary standing committee chairman.

South Bangla Agriculture and Commerce Bank has Dhaka University teacher and Ghatak Dalal Nirmul Committee leader Abdul Mannan Chowdhury as one of its 14 directors. Another director, Kazi Abdul Mazid, worked as managing director of different banks, Premiere Bank being the latest.

The number of Midland Bank's directors is 32. Its main sponsor is M Maniruzzaman Khandker, the prime minister's income tax adviser and chairman of Karmasangsthan Bank.

Yesterday, Deputy Governor Sitangshu Kumar told reporters that the applicants, who got the Bangladesh Bank nod, will be given licences if they submit necessary papers in the next six months.

The banks will be told to set up their head offices outside the capital, he said.

Due to pressure from the government high ups, the central bank at the end of the last year against its will invited applications seeking licences for new banks, sources said.

Of the 37 applications submitted, 16 were short-listed. Finally, a BB Board meeting with Governor Atiur Rahman in chair picked the six yesterday, a top central bank official said.

Earlier on Thursday, the central bank also approved three other banks sponsored by non-resident Bangladeshis.

Two board members Mohammad Tareque and Prof Sanat Kumar Saha were not present at yesterday's meet. They also did not attend the earlier board meeting where approval to new banks was discussed.

The BB placed to the board a number of justifications behind allowing new banks. It said since bank licences were last issued in 2000-01, there had been many significant developments in economy.

In FY2000-2001, the country's GDP was TK 2,160 billion which increased to TK 3,850 billion in FY 2010-11 at constant market price, it added.

Data on import, export and remittance in the last 10 years was also presented in the meeting.

The BB said the economy has grown and the banking system has become more competitive. But still a large number of people are under-banked in Bangladesh.

According to a recent survey of Institute of Microfinance, only 45 percent of nearly 9,000 households surveyed have access to loans from banks and micro-finance institutions.

The central bank said the new banks would help improve the service quality of banking by increasing competition in this sector.

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The kind of flagrant greed these esteeemed 'lawmakers' are showing is frankly disgusting.

: Sara Hossain

This particular political patronage is going to make the present the liquidity crisis even worse. Yet another example of party over country.

: Grumpy Old Man


  • Anonymous
    Monday, April 9, 2012 01:15 AM GMT+06:00 (200 weeks ago)

    Existing banks are already struggling with capital adequacy requirement and proper provisioning of their loan assets. Standard of central banking supervision has been in doldrums for quite some times. Introduction of new banks will add to the pressure.

  • Rashed C. Chowdhury
    Monday, April 9, 2012 01:40 AM GMT+06:00 (200 weeks ago)

    We have been negating the contribution of investors by bragging on their political affiliations, despite the efforts of more jobs, increased economic development and more liquidity for venture capitalists.

  • Sibat-e-Mubeen
    Monday, April 9, 2012 02:09 AM GMT+06:00 (200 weeks ago)

    Transferring wealth stolen away from country's exchequer, from general people life through share market scam, bureaucracy & politically supported Destiny group MLM activities, all kind of extortion at state level. Are going to be very difficult as foreign countries are questioning the sources of these funds. As a result banks need to be created to accommodate those wealth.

  • Zafar Benzadid
    Monday, April 9, 2012 02:20 AM GMT+06:00 (200 weeks ago)

    Considering political identity, Bangladesh Bank has given the go-ahead for six new private banks in spite of opposition of the wise of the country. It'll neither helpful to squeeze inflation nor expanding the money market. People has it that these banks are formed to perform one function; provide a safe place for the deposit of black money or valuables, not to be concerned with the ordinary banking business.

  • Anonymous
    Monday, April 9, 2012 02:59 AM GMT+06:00 (200 weeks ago)

    What is the source of the money these people are investing? How much they have paid as tax before and how much is possible for them to earn during their lifetime? Every now and then our PM speaks about corruption, will she issue some directive to self declared ACC to seethe sources of these money?

  • Shimul
    Monday, April 9, 2012 06:34 AM GMT+06:00 (200 weeks ago)

    They use the term 'bank' to plunder our money. Since government favors its political men, we should do out bit: Keep away from these banks.

  • Kazi Salim
    Monday, April 9, 2012 07:29 AM GMT+06:00 (200 weeks ago)

    The govt should have given attention to create more economic management of the existing Banks in the country. Creating more banks in the country will give no more, economic benefit other than creating jobs for some people. More monitoring, supervision on the economic management, better quality of customer services of the existing Banks, should have been prioritised by the govt.

  • sohel
    Monday, April 9, 2012 08:38 AM GMT+06:00 (200 weeks ago)

    More new banks? Bad policy but good politics. There are 48 banks & banking industry is ripe for consolidation. Govt. should resolve funding issue so these banks don't have to heavily depend on demand deposits & short-term borrowing to fund apex. Must open secondary market fixed income securities trading. So these banks can raise fund issuing long term bond.

  • shaiful
    Monday, April 9, 2012 09:46 AM GMT+06:00 (200 weeks ago)

    No need to open new Bank at the moment.

  • Tonmoy Barua
    Monday, April 9, 2012 10:04 AM GMT+06:00 (200 weeks ago)

    I think central bank should analyse the country's economic situation and size of the economy. It is not so big and most important not stable to give permission of setting more banks. Central Bank is controlling money supply and on the other hand giving permission to set up new financial institution is not wise.

  • Kazi Rashidul Azam
    Monday, April 9, 2012 10:45 AM GMT+06:00 (200 weeks ago)

    Is there anybody in Bangladesh to protect the rights of general people?

  • Raihan Sharif
    Monday, April 9, 2012 11:26 AM GMT+06:00 (200 weeks ago)

    The economy and more specifically the money market is not big enough to support so many banks. It will lead not to healthy competition but to syndication as banks will combine to preset the prices of their products. Good move by the AL then, to encourage more, not less, syndication and strangle what little we have of a free market economy.





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