The Bangladesh Bank board on Wednesday approved fresh guidelines for setting up new banking companies, agreeing in principle to issue licences to new banks, sources in the know said.
The new banking guidelines will work in tandem with the Banking Companies Act 1991.  However, the BB board meet, which was presided over by governor Atiru Rahman, did not specify how many new banking licences would be issued.
 “It is a long process. The central bank cannot promptly decide on the issue, as applicants must meet several formalities conforming to the new guideline and the BCA,” a senior BB official said.
 “After signing the meeting minutes on Thursday, the central bank will float advertisements seeking applications for new banking licences,” he further said adding, the central will thoroughly scrutiny every application received and then take a decision on them.
 The new guidelines incorporate some additional duties for new banks, including mandatory expenditure of 10 per cent net profit for corporate social responsibility (CSR) activities, he pointed out.
 According to the BCA 1991, a new bank shall not have a paid-up capital of less than Tk. 400 crore, he added.
 The new guidelines say a director or advisor to any banking company, other than the proposed bank, shall not be a director of the proposed bank. The number of directors on the board shall be restricted to 13. The chief executive officer (CEO) of the proposed bank shall have at least 15 years of experience in the banking profession.
 The ratio of urban to rural bank branch has to be 1:1, or as per instructions issued by the BB from time to time. A new bank has to channel at least five per cent of its total lending into the agricultural sector, or as per instructions issued by the central bank. Issuing licences to new banks has been a much-debated point ever since finance minister AMA Muhith took a stand in favour of it. Incidentally,  the chairman and the other members of the BB board felt there was no need to rush the issue.

News: The Independenr/ Bangladesh/ 15-Sep-11