People’s Bank seeks 6 months to meet BB condition

Proposed People’s Bank has sought a six-month extension to increase its paid-up capital as per the regulatory requirement to get the go-ahead for banking operation.

The proposed bank applied to the Bangladesh Bank (BB) for more time as its sponsor shareholders are yet to raise the required capital, a high official of the central bank said, asking not to be named.

The high-up argued that the bank failed to meet the requirement several times. Earlier the Bangladesh Bank also granted a six-month extension which will expire on August 31.

As per the regulatory requirement, the bank has to ensure Tk 500 crore paid-up capital to fulfill the regulatory condition for final approval.

The central bank discussed the extension issue in its 417th board of directors meeting presided over by Governor Fazle Kabir on Monday, but was yet to take any decision.

“Proposed People’s Bank sought more time to meet BB requirement but no decision has been taken in the meeting due to time constraint,” said Bangladesh Bank Executive Director and spokesperson Md Serajul Islam.

The Bangladesh Bank issued letters of intent to Bengal Commercial Bank, Citizen Bank and People’s Bank in February 2019.

Bengal Commercial Bank and Citizen Bank got final approval but People’s Bank could not make it for its failure to meet requirement.

Previously, new banks had to maintain Tk 400-crore paid-up capital to open up their shops, but since February 2019 the BB decided to raise the capital base by Tk 100 crore.

“We have increased the amount considering the size of economy,” incumbent Deputy Governor of the Bangladesh Bank Abu Farah Md Naser said, adding that the paid-up capital of each bank must be Tk 500 crore.

MA Kashem, an Awami League leader in the US, is the chairman of the proposed bank. According to the industry insiders, the chairman is wooing many investors for capital but to no avail.

Contacted, MA Kashem told The Business Post the ongoing Covid-19 pandemic is the main reason behind the delay in getting the final nod from the Bangladesh Bank.

“Now we are working on running our operation,” he said, pointing out that not only for People’s Bank, the paid-up capital for each bank must be Tk 500 crore.