Approval for three new commercial banks is in the works at a time when the country's banking sector is handicapped by financial irregularities and bad loans.

Bangladesh Bank has completed the primary process for issuing licences to two new private banks -- Bengal Bank and People's Bank.

And the third one -- Community Bank Bangladesh -- proposed by the Bangladesh Police is under consideration, a BB official said yesterday. 

Bangladesh Police Welfare Trust, a concern of Bangladesh Police, applied to the BB on May 23.

“We are verifying the documents and we will complete the procedures soon,” the official said, adding that the verified documents may be placed in the board meeting next month. Prime Minister Sheikh Hasina earlier agreed to allow the Bangladesh Police to set up a new bank if they could arrange Tk 400 crore as paid-up capital.

The BB had earlier turned down proposals from Bengal Bank and People's Bank, but it had to go back on the decision following pressure from the government higher-ups. In its response to the finance ministry on December 18, the BB said the current precarious conditions of the nine new banks should be considered before allowing yet another bank.

The capital base of the nine banks, which got licences in 2013, is not good, with two of them being currently on life support, according to the BB letter.

The central bank is also under pressure to allow another new bank -- Citizen Bank -- from the government higher-ups, the BB official added.