Development of banking sector in Bangladesh 0n 2022|New Banks & Customers of Bangladesh

 

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If suitable rules are in place to ensure that new banks are well compliant in operating their businesses and that the interests of depositors and other stakeholders are effectively protected, then new banks are not a concern. As a whole, new banks increase deposit mobilization, business opportunities, and investments, all of which support economic growth in the nation. Most importantly, opening new banks produces new job possibilities. The saving-to-GDP ratio in the nation is also boosted by the opening of new banks. On the other hand, if strict control cannot be established, an increase in the number of banks could lead to significant issues in the financial sector and have a negative effect on the economy. When it comes to conducting business operations, banks differ significantly from other business firms. Moreover, banks must adhere to several national and international regulations.

 

Over the past few years, the nation has consistently kept its GDP growth rate at over 7%, and in the years to come, this growth rate is anticipated to increase even more. Public sector investment is the cause of this large economic growth. Our private sector, particularly the business sector, has not expanded adequately in line with the expansion of the national economy. Self-employment and small, independent retail businesses have clearly thrived across the nation, and they now serve as the primary engines for the expansion of the economy. Corporate business houses have not expanded as quickly as was anticipated, and even the county's wholesale industry is still controlled by a small number of conglomerates.

 

Nearly all banks were competing for Chottogram's business community by presenting alluring loan proposals. The businessmen who were hesitant or cautious about obtaining bank loans realized that there is easy money available. When I was a bank employee in Bangladesh, I saw numerous bankers waiting in front of a businessman's office for hours on end in an effort to meet with him and persuade him to borrow money from their institution. Eventually, this kind of competitiveness evolved into unfair competition. Numerous businesspeople engaged in indiscriminate overtrading, with well-known results. Chottogram, which was once a hub for banks' high-quality lending, is now a significant burden for nearly all institutions. Additionally, mobilizing deposits is a difficult undertaking for fledgling banks.

 

Now that it has been suggested, Bangladesh Bank should seriously consider classifying all banks into several categories, such as Schedule-A banks, Schedule-B banks, Schedule-C banks, and so forth. Banks may be categorized based on performance-related factors, which must include, among others, the capital adequacy ratio, professional strength, loan deposit ratio, loan capital ratio, NPL rate, provisioning rate, and NPL policy. Some regulatory measures, including as lending limits, deposit requirements, sectoral funding caps, etc., will need to be implemented depending on the category of banks.