Bangladesh has just too many banks: Finance Minister Muhith

AMA Muhith, the finance minister of the Awami League government which has cleared 10 private banks in as many years in power, thinks Bangladesh’s banking sector has become “too large”.

“The banking sector has become too large. Too many banks, too many financial institutions,” he said to reporters when asked about the sector after a meeting at the Secretariat on Wednesday.

A total of 58 government and private commercial banks and 34 non-bank financial institutions are operating currently.

Though many bankers believe the number of banks in the country was already too large, the government gave licence to nine more in 2012. Muhith had admitted that the banks were cleared on political considerations.

Later, the government cleared the Border Guard Bangladesh’s Simanto Bank.

The banking sector has been in discussions for huge loan scams in past few years. The banks cleared in 2012 are also struggling with irregularities and liquidity crisis.

As some of the new banks are already battling for survival, Muhith said in November last year that the government was approving three more commercial banks because “many are still out of banking services”.

The amount of bad loans totalled around Tk 1.4 trillion, or 15 percent of total loans disbursed, according to Bangladesh Bank data released in June.

IMF Executive Director Subir Vithal Gokarn expressed concerns over the bad loans during a meeting with Muhith on the sidelines of the annual IMF-World Bank meetings around two weeks ago.

Muhith said he told the IMF official that he would make a report before this government ends its term so that the next one can take effective steps to address the issue.