Specialised banks face restrictions in opening branches

Four specialized banks will have to fulfill certain conditions to open new branches. The restrictions were imposed yesterday mainly to minimize the misuse of government funds in the banks.

The Banking Division yesterday sent letters to the four banks -- Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, Karmasangsthan Bank, and Ansar-VDP Unnayan Bank -- saying they would have to meet six conditions for opening new branches.
 

As these banks run on government funds they have to follow the guideline, the letter said.
An official of the Banking Division said these banks have many loss-making branches and the restrictions have been imposed to minimize their losses. The government would give permission for opening new branches only when 80 percent of their branches will become profitable. 

A bank will not open a new branch in an area if there is another branch of the same bank within 10 kilometres, according to a condition. If additional budget and manpower are required for opening a new branch, the proposal has to be sent to the Banking Division along with the recommendation of the board of the concerned bank by September every year. 

After obtaining the approval, the proposal will have to be okayed by Bangladesh Bank.
According to a separate condition, the two agriculture-related banks will have to inform the government when the new branches will become profitable.
The banks' 90 percent branches should be at the Union Parishad level, according to another condition. (Source: The Daily Star.net, 2 January 2013)