Why the need for more banks? | The Daily Star
12:00 AM, May 24, 2019 / LAST MODIFIED: 12:00 AM, May 24, 2019

Why the need for more banks?

The country’s banking sector is already volatile and saturated.Yet, three more commercial banks, namely Bengal Bank, People’s Bank and Citizen Bank, were licensed this February. With their inclusion, the number of banks stands at 67 including state-owned, specialised and foreign banks. These new banks seem to be connected to the ruling party unlike the nine banks which were licensed back in 2013, whose current financial conditions are already substandard.

Though BB initially turned down the proposals of these new banks, they finally gave in due to the pressure from government high-ups. This approval has raised concerns among economists and banking experts regarding the relevance of these banks. Given the population size and lack of efficiency in the existing banking sector, especially the new fourth generation banks, such an approval is undesirable. Unhealthy competition is prevalent among banks as they desperately seek to attract deposit and investment.

In a nation, the more the opportunity arises for higher investment and financial services, the higher the need for new banks. But in the case of these new banks, financial experts can hardly find any justification, considering the already dismal condition of our banking sector. Sadly, this will only aggravate the situation.

 

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