The government is planning to reduce the number of banks to 10 to 15 considering the ground reality and the number of state owner banks to be reduced to two. The rest will be merged.
Bangladesh Bank Governor Dr Ahsan Mansur said excess banks must be merged to ensure proper governance. He was speaking as chief guest at a seminar titled 'Banking Sector: Current Status and Future Challenges' at Jagannath University on Wednesday.
The governor said the banking sector lost over 20 to 25 billion dollar in the past due to poor governance and management irregularities and much of it were laundered under family rule in banking sector.
He said at present many more banks operate in the country than required and considering the ground reality, their number must be drastically reduced. The governor further said the number of state owner banks also to be reduced to two.
The Governor said there are now 61 commercial banks in the country, which is much more than required. The number must be reduced considering the need. He said if the number of banks is reduced, it will be easier to ensure good governance.
He further said corruption, irregularities, nepotism and lack of good governance caused the loss of over Tk 300,000 in the banking sector and much of it has been laundered. So to ensure good governance and theft, both the number of private and state owned must be drastically reduced.
Regarding non-performing loans, Mansur said he is optimistic to bring it down to 25 percent by next March. However if the revised Bangladesh Bank Ordinance is not passed in the meantime, there is a huge risk of political interference to undo it.
The Governor said Bangladesh Bank is working on forming a bank resolution fund of Tk 30,000 to 40,000 crore from deposits. Not only banks, but also non-bank financial institutions will be brought under this fund.
Speaking as special guest Jagannath University Vice-Chancellor Professor Dr. Rezaul Karim said it is now clear how fragile the banking sector is. Efforts are under way to revive this sector.
At the event, Chairman of the Department of Economics, Professor Dr. Sharif Mosharraf Hossain said everyone knows why the current situation in the banking developed. Due to increase in default loans, banks lending has decreased hindering investment.
In addition, banks are failing to ensure adequate interests to depositors. Although various policies have been adopted to reduce income inequality, the banking sector needs to be brought under stricter monitoring in the future.
Member Secretary of Bangladesh Economic Association, Professor Dr. Md. Helal Uddin and chairman of the Department of Economics Mohammad Sharif Osman Hossain, delivered the welcome speech.
Convener of Bangladesh Economic Association, Professor Dr. Mahbub Ullah, presided over the event. Deans, department chairmen and teachers of various faculties of the university were present on the occasion.
