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Bangladesh approves six new private banks

Move criticised as being politically motivated

Gulf News

Dhaka: Bangladesh yesterday approved the applications of six new private banks, sponsored locally, raising the total number of banks to 56, a central bank statement said.

"The six new banks are Union Bank, Modhumati Bank, Farmers Bank, Meghna Bank, Midland Bank and South Bangla Agriculture and Commerce Bank," it said.

Most of the sponsors named in the statement were politically influential people belonging to the ruling Awami League or its allies such as the Jatiya Party, and the development came three days after the central bank approved three banks to be set up by Bangladeshi entrepreneurs living in the United States and Britain.

The prime sponsors of the six banks are former president and Jatiya Party chief H.M. Ershad (Union Bank), ruling party lawmakers Fazle Noor Taposh (Modhumati Bank) and Mohiuddin Khan Al Amgir (Farmers Bank), S.M. Amjad Hussain (South Bangla Agriculture and Commerce Bank) and Ashequr Rahman (Meghna Bank) and Moniruzzaman Khan Khandaker (Midland Bank), the income tax lawyer to Shaikh Hasina.

No need

"The new banks are given approval for business after considering the merit of the sponsors and the benefit of them," Deputy Governor Shaikh Sur Chowdhury told reporters after the meeting.

The approval came amid criticism the decision was being "politically motivated" as no new bank was needed at the moment while Finance Minister Abdul Maal Abdul Muhith earlier ruled out the criticisms saying, "Approving new banks is solely a matter of the government's political wish".

Sur Chowdhury, however, dismissed the claim of political pressure for allowing new banks, saying, "The authority was cautious in allowing more banks in maintaining proper criteria instead of considering any other reasons."

Bangladesh Bank last November received 37 applications for new banks, of which five were from non-resident Bangladeshis (NRB) and a central bank working group examined the applications forwarded a list of 16 local and three NRBs banks to the board meeting for a final decision.

According to the guideline for establishment of banks issued by the central bank last September, the bank would be a public limited company incorporated in Bangladesh, having a 40 million taka (Dh1.79 million) paid-up capital.