Many banks which began operating in 2014 are not performing satisfactorily due to lack of good governance and skilled manpower
The entry of three new banks in the country has intensified the problem of skilled manpower, not to mention unhealthy competition in deposit collection, remarked industry experts and bankers.
Many banks which began operating in 2014 are not performing satisfactorily due to lack of good governance and skilled manpower, said Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh (ABB), and managing director and CEO of Dhaka Bank.
“Now we have to compete for deposit collections. This competition will increase further. New banks will offer more competitive rates. As a result lending interest rates will go up,” he added.
Rahel Ahmed, managing director of Prime Bank, told the Dhaka Tribune: “The new banks will face difficulties in recruiting senior officers. But I also see this positively, as more employment opportunities will be generated.”
Pubali Bank Managing Director Md Abdul Halim Chowdhury said the new banks cannot hire skilled manpower from his bank, but he also felt under-performing employees are free to leave.
There is a huge dearth of skilled manpower in the banking sector, and according to former advisor to the caretaker government, AB Mirza Azizul Islam, the entry of new banks will intensify this crisis.
“There is no logic behind approving more banks,” he observed. “We should think of laws to force mergers for the existing ones, rather than establish new banks.”
The central bank on Sunday gave their approval to three new banks: Bengal Bank, People's Bank, and Citizen Bank, who gave Letters of Intent (LoI), bringing the number of scheduled banks in the country to 62.
Bengal Commercial Bank has been initiated by the Bengal Group of Industries, a local manufacturer of plastic products. The group vice-chairman, Jashim Uddin, will act as chairman of the bank.
MA Kashem, an AL leader in the US, is the chairman of the proposed People's Bank, while Jahanara Huq, mother of Law Minister Anisul Huq, is the chairman of Citizen Bank.
On October 29 last year,, the central bank approved Community Bank Bangladesh and had also sent back proposals for three proposed banks due to lack of adequate documents for licenses. Bangladesh Police Welfare Trust owns Community Bank Bangladesh.
Bangladesh Bank approved the new banks at a time when the banking sector is going through a crucial time riddled by default loans, scams, lack of good governance, and a crisis in lending and deposits interest rates, said experts.
At the end of September, 2018, total non-performing loans stood at Tk 99,370 crore, which was 11.45% of total outstanding loans.