Bangladesh Bank has decided to give approval for one more commercial bank to be set up despite opposition from different corners.

The central bank's board yesterday settled on giving Bangladesh Police Welfare Trust the go-ahead to take required procedural measures to set up the company for the proposed Community Bank Bangladesh.

Bangladesh Police Welfare Trust, a concern of Bangladesh Police, had applied to Bangladesh Bank on May 23 for a licence to set up the new Community Bank Bangladesh, to be owned by Bangladesh Police.

BB Governor Fazle Kabir presided over yesterday's meeting at the central bank headquarters in the capital.

With this new one, the number of scheduled banks in the country will stand at 59.

Prime Minister Sheikh Hasina had earlier agreed to allow Bangladesh Police to set up a new bank if they could arrange Tk 400 crore as paid-up capital.

A BB official told The Daily Star yesterday that the central bank would communicate with Bangladesh Police Welfare Trust in one or two days asking it to submit a business plan on how to operate the proposed bank.

The managing director of the proposed bank will have to present the business plan before the central bank's board.

The central bank gave the approval or the “letter of intent” for the proposed bank at a time when the country's banking sector is plagued with financial irregularities and bad loans.

At March's end, the total amount of default loans in the banking sector stood at Tk 88,589 crore, up from Tk 74,303 crore at the end of December 2017. Approval for two more commercial banks -- Bengal Bank and People's Bank -- is in the works, said the BB official. The two proposed banks may get the letters of intent within the shortest possible time as the central bank has almost completed verifying documents they submitted.

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 government higher-ups.

In its response to the finance ministry on December 18, the central bank said the current precarious condition of the nine fourth generation banks should be considered before allowing yet another bank.

The financial health 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 from government high-ups to allow another new bank -- Citizen Bank, the BB official added.