Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has finalized a fresh guideline, spelling out the details that the intending sponsors will have to follow while filing applications for setting up new banks, officials said.

“We’ve already finalized the guideline for setting up new commercial banks. But it will be published along with advertisement inviting fresh applications from interested entrepreneurs to establish new banks, if our board of directors give green signal to issue licenses for new banks,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.   

He also said the central bank will run all its businesses relating to issuance of fresh licenses for new banks in line with its board decision.

Besides, the central bank will place a study report to its board of directors’ next meeting seeking decision on issuing licenses for new commercial banks.

“We’re now working to finalize the report with necessary information including the growth of banking industry considering the country’s population,” another BB official said, adding that the latest situation of the banking industry in the neighboring countries will be included in the report.

“The board will have to take a fresh decision on the issue as there is bar on establishing new banks. The board imposed the bar in 2005 considering the country’s socio-economic condition,” the BB official said without elaborating.

An executive director of the BB said the date of board meeting is yet to be finalized but it will take place shortly.

Earlier, Finance Minister AMA Muhith said issuing of licenses for new banks is a “political decision” of the government, brushing aside concerns of the central bank that the move is unnecessary as the banking sector is already “over-saturated”.

“It is our political decision to issue licenses for new banks in the country despite reservation made by the BB,” Muhith told economic reporters in Dhaka on July 24 last at a post-budget talk on challenges of the new fiscal year.

“We’ll be guided by our board,” BB Governor Atiur Rahman told reporters on Saturday while replying to a query relating to the government’s political decision to issue licences for new banks.

On June 29 last, AMA Muhith told Parliament that the government would invite applications from entrepreneurs willing to establish new banks and life insurance companies.

Currently, a total of 47 commercial banks are in operation in Bangladesh.

The Awami League government during its earlier tenure between 1996 and 2001 allowed a good number of new banks and insurance companies to start operations.

Prior to that, the Bangladesh Nationalist Party (BNP) government had issued licenses to some private commercial banks for operations in the early 1990s.

BBN/SSR/AD-31July11-10:14 am (BST)