LoI’s for nine new banks next week

 

(FE) The central bank will issue letters of intent (LoIs) to nine newly-approvedcommercial banks by next week, asking them to comply with the requirements and existing rules and regulations before getting licences, officials said.
“We’ll issue the LoIs to the nine approved banks in line with the decision of our board of directors at its last meeting,” a senior official of the Bangladesh Bank (BB) told the FE Monday.

He also said the authorities of the approved banks will get a maximum period of six months to comply with the requirements and existing rules and regulations for setting up new commercial banks.
“We’ll give licences to the approved banks only after they comply with our requirements,” he said.
The central bank may issue the licences before six months, if any approved bank can comply with the BB’s requirements.
“The management of the approved banks will have to apply, seeking licences to the central bank, after properly complying with the LoI’s requirements,” he noted.
The central bank will check tax-related issues of the sponsors of the approved banks with the National Board of Revenue (NBR) before issuing licences, another BB official said.
He also said loan-defaulters and tax-evaders will not be allowed to be directors of the new banks.

The central bank Sunday approved six more private commercial banks (PCBs), aiming to improve the quality of banking services by increasing competition in the sector.
Earlier on April 4, the BB also approved three new commercial banks, sponsored by non-resident Bangladeshis (NRBs), to help boost the country’s foreign exchange inflow.
“Capital infusion by these new banks will augment capacity of the banking system to meet credit needs of the expanding corporate sector,” the BB said in a statement Monday.
Currently, because of limitations on large exposures, big corporations must approach many banks simultaneously for their credit needs, which then have to be stitched together in syndicate or participation loans, the central bank said in the statement, explaining the economic context and rationale behind issuing new bank licences.
“The entrance of the new banks will add to the aggregate capital base of such existing syndications, allowing larger loans for productive investmentand job-creation,” it noted.
Foreign exchange, brought in as paid-up capital for the new NRB banks, and the foreign-exchange position deposits that are likely to be attracted, will strengthen the country’s balance of payments, according to the statement.
Also, expatiate management in such banks will hopefully have a helpful “demonstration effect” on the local banking sector, the BB added.
“Entry of the new banks can therefore be expected to improve the quality of financial services by increasing competition in the banking sector. They will also facilitate meeting the growing credit demand in a fast expanding economy,” the central bank noted.