Amid private commercial banks struggling with liquidity crisis, the central bank has given the green light to state-owned specialised Probashi Kallyan Bank (PKB) for commercial banking operation, taking the number of commercial banks to 58 in the country.
On Sunday, the Bangladesh Bank’s board of directors cleared the proposal for converting it into a scheduled bank.
PKB started its operation in April 2011 with a capital of Tk 1 billion aiming to provide collateral-free loans to overseas jobseekers as well as loans for rehabilitation of returnee workers through various income-generating activities.
Official data showed that only 23,731 outbound Bangladeshi workers were given loans amounting to Tk 2.29 billion by the bank between the fiscal years 2011-12 and 2016-17. The bank has 45 branches across the country.
In 2016, the bank started the process to convert itself to scheduled bank, which required a Tk 4 billion paid-up capital.
In April this year, Wage Earners' Welfare Board (WEWB) handed over Tk 1.0 billion to PKB, which helped it to manage the required paid-up capital for a scheduled bank.
“Until now, we could not collect deposits, but that will be not the case anymore,” PKB Managing Director Mahtab Zabin told Bangla Tribune.
The bank will be now able to bring remittance, said the bank’s top official adding that they needed to increase products to be in competition.
Analysts, however, said a new commercial bank will leave the already troubling financial sector in doldrums.
“For the size of an economy like Bangladesh, 57 commercial banks is too much. The PKB could have signed a deal with a large commercial bank to offer products,” said Ibrahim Khaled, a former deputy governor of the Bangladesh Bank.