Another lender enters the fray

A new lender will be populating the already-crowded banking landscape after the financial regulator yesterday gave the final go-ahead to Bengal Commercial Bank to set up shop.

This will take the total number of banks in Bangladesh to 60.

The decision came at the board meeting of the central bank, where the preliminary agreement was given to People’s Bank, said Bangladesh Bank spokesperson and executive director Md Serajul Islam.

“We will not go for aggressive banking,” said Jashim Uddin, chairman of the incoming bank.

Bengal Commercial Bank, which is originally called Bengal Bank, will concentrate on lending to small- and medium-sized enterprises and consumer financing.

The bank has set out on advancing the financial inclusion agenda, Uddin said, adding that its branches will mostly be based in rural areas.

The central bank was originally opposed to the idea of letting in more banks. Experts also opposed the move, saying the sector is already saturated and its overall health, especially of the newer banks, was on the wane.

But its resistance was futile as in 2018 after pressure from government higher ups, particularly then finance minister AMA Muhith, it decided to start the process of providing licences to four proposed banks.

The proposed financial institutions are: Community Bank Bangladesh, Bengal Commercial Bank, Peoples Bank and Citizen Bank.

Bengal Commercial Bank was initiated by the Bengal Group of Industries, which is a local manufacturer of plastic products. AL lawmaker Morshed Alam is chairman of the group and his younger brother, Jashim Uddin, is the bank’s chairman.

MA Kashem, an AL leader residing in the US, is chairman of the proposed Peoples Bank.

The central bank had stalled the process of providing licence to the proposed People’s Bank following allegations of money laundering against Kashem.

However, Kashem had vowed to bounce back, saying that he will manage the licence within the shortest possible time.

“We recently received a money laundering allegation against the chairman of the proposed People’s Bank. We will take a decision on the bank after settling the complaint,” said a BB senior official at the time.

The BB forwarded the complaint to the Bangladesh Financial Intelligence Unit to scrutinise the issue in detail, he said, adding that Peoples Bank would be provided with a licence if its chairman could prove that he had no link with the case.

Kashem has net assets worth Tk 43.94 crore in the US and Tk 56.92 lakh in Bangladesh, according to documents provided by him to the central bank as part of the process to buy his stake.

In October 2018, the central bank requested the foreign affairs ministry to get details of Kashem’s net assets in the US.

The ministry, however, gave positive feedback about Kashem to the BB, which helped him get initial approval from the central bank.