BANGLADESH

Dhaka Stock Exchange authorities believe that the High Court rule, which seeks explanation on a Securities and Exchange Commission order that makes holding two percent shares by directors mandatory, will not impact trading in the capital market.

Soon after the High Court issued the rule on Sunday, DSE called an emergency meeting where it was decided that the trading would be stopped, but later they changed their mind.

DSE president Rakibur Rahman, after the meeting, urged the investors not to panic over the High Court ruling.

DSE officials will sit with attorney general Mahbubey Alam at 9am on Monday to discuss the SEC order, Rakibur said. "The SEC direction will have to be implemented."

DSE director Ahsanul Islam also expressed hope that the rule will not impact the market.

The central bank on Sunday approved six more private banks, with names of ruling party leaders associated with each of them in one way or the other.

Bangladesh Bank deputy governor S K Shur Chowdhury told journalists about the decision after a meeting of the central bank board, presided by governor Atiur Rahman.

However, the central bank has made it mandatory for the new banks that they keep most of their branches outside Dhaka.

The new private banks are – Union Bank, Midland Bank, Madhumati Bank, Farmers Bank, South Bangla Agriculture and Commerce Bank, and Meghna Bank.

Of the new approvals, Farmers Bank is proposed to be chaired by Awami League presidium member and MP Mohiuddin Khan Alamgir.

Sheikh Fazle Noor Taposh, an Awami League MP and the prime minister's nephew, had applied for Madhumati Bank. Humayun Kabir has been named chairman of the bank.

Prime minister's income tax adviser M Moniruzaman Khondokar recommended licence for Midland Bank.

The application for Union Bank names one Shahidul Alam as the bank's chairman and one of the sponsors is Golam Mosih, a presidium member of HM Ershad-led Jatiya Party. Rumours have it that Jatiya Party chief HM Ershad is the key person behind this bank.

Ruling party MPs H N Ashikur Rahman and Nasrul Hamid applied for Meghna Bank with Rahman as its chairman. Both head two parliamentary standing committees.

South Bangla Agriculture and Commerce Bank has S M Amzad Hossain as its chairman, while Dhaka University teacher and Ghatak Dalal Nirmul Committee leader Abdul Mannan Chowdhury is one of the sponsors.

CONTROVERSY & CRITICISM

The move to allow more private banks has drawn criticism for several quarters. Critics say the decision is 'politically motivated', especially in view of the ruling party leaders associated with them.

Replying to criticism, finance minister Abul Maal Abdul Muhith had earlier said that "approving new banks is solely a matter of government's political wish".

The board resumed its meeting at 1:30 pm on Sunday to decide the fate of applications, according to the deputy governor.

"The proposals are being scrutinised in detail," he had said last week.

Asked whether the new banks were cleared on political considerations, Shur on Sunday said, "All of them who got their bank proposals cleared are citizens of Bangladesh."

"The decision to give licenses to the six banks was taken after scrutiny in detail," he reiterated. "No political consideration worked there."

CONDITIONS

The new banks were given clearance with certain conditions, Shur said.

The conditions lay down that the new banks will have to submit their commercial plan to the central bank within six months and deposit Tk 4 billion as paid-up capital before starting operations.

The new banks will have to have 'white-money' as capital, Shur said.

The banks will also have to set up most of their branches outside Dhaka, he said, adding, "The move to set up headquarters outside Dhaka will be encouraged."

The Bangladesh Bank on Apr 4 approved three banks sponsored by non-resident Bangladeshis (NRBs).

Promoters of two NRB banks, US-based Nizam Chowdhury and UK expatriate Iqbal Ahmed, had proposed identical names for their NRB banks.

They proposed naming their bank as NRB Bank Limited. But the central bank said the name would be changed through discussion.

Another US expat Farashat Ali proposed his bank to be christened as NRB Commerce Bank Ltd.

The board had, however, not been able to give go-ahead to new private banks for which it had received as many as 37 applications. It had adjourned the meeting to Sunday.

On Sep 27 last year, Bangladesh Bank issued a circular seeking applications for new banks. Interested entrepreneurs were asked to apply by Nov 30, along with a Tk 1-million non-refundable deposit.

A condition was also attached to keep loan defaulters at bay.

Other conditions to apply included a paid-up capital of Tk 4 billion, holding of a maximum 10 percent share by an individual sponsor, keeping not more than 13 members in the board and providing the bank capital from the investors' assets or income as declared in the income tax statement.

The list had been sent to the Prime Minister's Office and the finance ministry, and then returned to the central bank after further scrutiny.