The nine new banks which opened last year are struggling to gain any traction in their business, as too many banks chase a limited customer pool amid sluggish economic activities.
As of February 20, the average advance-deposit ratio (ADR) of the nine new banks stood at only 54 percent, meaning the banks lent only Tk 54 against a deposit of Tk 100, which is much lower than the industry average of 70.35 percent and the Bangladesh Bank ceiling of 85 percent.
Of the new banks, Modhumoti Bank's ADR was only 15 percent, the lowest, followed by The Farmers Bank at 23.46 percent and NRB Bank 24.10 percent, according to data from Bangladesh Bank.
The total number of banks operating in the country now stands at 56, and a senior official of The Farmers Bank said the competition to get clients is fierce.
The bank, which has 12 branches at present, is now looking at small towns and rural areas to enlist new clients.
“We are trying to overcome the challenges. You will find us in a better situation by June this year,” said Mizanur Rahman, managing director of Modhumoti Bank that currently has six branches, with another 10 on way this year.
Muklesur Rahman, managing director of NRB Bank, said potential customers are still watching the situation before taking up fresh loans. He, however, said his bank's ADR has now increased to 54 percent, up from only 24 percent in February.
Amid this situation, the central bank has called a meeting with the new banks to discuss their business issues and challenges. BB Governor Atiur Rahman will chair the meeting to be attended by chairmen and managing directors of the new banks.
However, not all the new banks are struggling. NRB Global Bank's ADR has reached nearly 84 percent and that of NRB Commercial Bank 74 percent.
“We are going cautious, not aggressive,” said Abdul Quddus, managing director of NRB Global Bank.
Many analysts had opposed the central bank's move to permit more banks in the country, saying there are already too many banks. Despite that, BB allowed nine banks on political consideration.
On the other hand, India's central bank granted permission to only two new banks last week, although the country's half of the 120 crore population is out of banking services.
Currently, India has 88 scheduled commercial banks.