After being rejected by Bangladesh Bank (BB), an inter-ministerial meeting on Tuesday decided to allow the proposed Palli Shanchaya Bank (Rural Savings Bank) to function as a Micro-Finance Institution (MFI) to cater to the needs of rural people and their development.
The decision has been taken, given the current operations of a lot of scheduled and specialised banks in the country justifying little space for another new specialised bank, a senior official in the finance ministry told New Age.
While a new bank could not make any difference in achieving its target to empower rural economy, the finance official said, ‘The time left of the current parliament for enacting a new act for the proposed bank is inadequate as the parliament’s tenure is set to over on 24th of this month.’
The meeting held at the finance ministry was presided over by M. Aslam Alam, Secretary, Bank and Financial Institutions Division within the finance ministry, which was attended by official representatives from BB, Local Government Rural Development and Cooperatives Ministry, Finance Division, among others.
‘It remains a distant reality to enact a new act for a bank during the remaining period of the present parliament as it involves a number of must-do formalities, while a galore of traditional and specialised banks currently operational in the country does not provide a good reason for establishing another new bank,’ an official who attended the meeting told New Age on Tuesday.
The meeting decided the Palli Shanchaya Bank will change its name to a suitable one and register itself with the Office of the Registrar of Joint Stock Companies and Firms and then obtain license from Micro-Credit Regulatory Authority (MCRA) before launching its countrywide lending operations among members of ‘One House, One Farm’ under the Rural Development Division.
Earlier, BB rejected a proposal for establishment of a rural savings bank on the ground that its goal said to be boosting the rural economy could not be achieved when other such specialised banks have faltered.
The central bank conveyed its opinion to the finance ministry recently based on a proposal of LGRD and Cooperatives ministry on the proposed bank.
The draft of the Rural Savings Bank Act 2013 envisages trading, deposit collection, lending, import and export functions, dealing with foreign exchange and other traditional banking activities.
However, finance officials said if the new entity obtains license from MCRA, it would have limited activities like taking deposits from its members and lending only among its members.
‘Import and export functions, dealing with foreign exchange and other traditional banking activities as sought by the LGRD ministry will not be allowed to function under the new method, if implemented,’ a BB official said.
The meeting decisions would soon be sent to LGRD and Cooperatives ministry for their feedback.
-With New Age input
