The Bangladesh Bank has rejected a proposal for the establishment of a rural savings bank as its goal said to be boosting the rural economy could not be achieved after other such specialised banks have faltered.
The central bank conveyed its opinion on the proposal to the finance ministry on Wednesday. The LGRD and cooperative ministry was pursuing the matter with the finance ministry, a finance ministry official said.
The proposed bank, according to the draft law, wanting to remain outside the purview of the Bank Company (Amendment) Act 2013 will harm the banking sector, the central bank said.
‘Banking institutions such as Ansar-VDP Bank, Expatriates’ Welfare Bank and Employment Bank have so far failed to achieve their goals,’ the Bangladesh Bank said. ‘An approval for the proposed rural savings bank will be unwise.’
The central bank also said that the proposed bank would need licensing with the central bank for the banking activities the draft law proposed.
The draft of the Rural Savings Bank Bill 2013 envisages trading, deposit collection, lending, import and export functions, dealing with foreign exchange and other traditional banking activities.
A high central bank official said that a new bank would only bring about disaster in the already over-saturated banking sector where some new banks are struggling for survival.
‘We will convey our stand on the proposal to the LGRD and cooperatives ministry,” a finance official told New Age on Thursday.
The draft law of the proposed bank says that its authorised capital would be Tk 1,000 crore and the paid-up capital Tk 600 crore to be owned by the government.
Members of the Rural Development Division project ‘One House, One Farm’ would own the remaining capital. The project has 40,527 villages under its coverage.
The proposed bank, according to the draft, would have branches in rural areas, especially outside municipal areas.
The bank’s board of directors would be composed of 17 members — seven nominated from among the bank’s shareholders and others from among the bureaucrats. The rural development secretary would be the chairman of the proposed bank.
A high Rural Development Division official said they had got a go-ahead from top policy-makers of the government and that the opinion of the central bank would be of no use if the government decides to set up the bank by enacting the law.
-With New Age input
