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Feasibility of more banks
2/3/2006
IT was reported that the central bank received some 50 applications to set up private commercial banks. Theoretically, the central bank or Bangladesh Bank only can give legal sanction for the establishment of commercial banks. But overlapping this reality is the fact that Bangladesh Bank is not fully autonomous and, therefore, remains susceptible to pressure to even take actions in some areas by contradicting its own declared policies. Thus, it is thought that the central bank may again have to yield to pressure and this would enable some more private banks to come into existence when such an addition to the number of banks is thought to be imprudent by the country's economists, bankers and other financial experts. There are some 49 commercial banks in the country and the number is considered as adequate by the users of banking services.
According to a credible study, the market for banks in Bangladesh turned into a saturated one sometime ago and it would be risky to admit more of them to engage in banking operations. A number of third generation banks, some 12 of them, which came into being as a result of their alleged political sponsorship earlier, are finding the going or competition from the well-established banks a lot tougher than what they perceived. Most of them are in a precarious conditions and are in the list of the 'problem banks ' of the Bangladesh Bank. Therefore, there can be no merit in increasing the number of sick banks. Rather, the goal should be to cure their sicknesses and facilitate all the existing commercial banks to consolidate their positions and become stronger in every respect under the guidance of the central bank.
Shireen Haque
Baridhara, Dhaka
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