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ESTABLISHMENT OF NEW BANK IN PRIVATE SECTOR

ESTABLISHMENT OF NEW BANK IN PRIVATE SECTOR

The establishment of a new bank in the private sector in Bangladesh is governed by the Banking Companies Act of 1991. According to Section 31 of this Act, any company intending to engage in banking activities must first obtain a license from Bangladesh Bank, the central regulatory authority. This legal requirement ensures that all banking institutions operate within a regulated framework, promoting financial stability and protecting depositors’ interests. The licensing process involves a thorough evaluation of the applicant’s financial health, governance structure, and adherence to regulatory standards. Compliance with these legal stipulations is crucial for maintaining the integrity and trustworthiness of the banking system in Bangladesh.

Issuing authority

Name : Banking Regulation and Policy Department 12th Floor, 2nd Annex Building Head Office, Bangladesh Bank

Email : gm.brpd@bb.org.bd

Website : www.bb.org.bd

Required list of all documents

  1. Letter of Application [In Bangladesh Bank’s format]
  2. A Bank Draft [In favor of Bangladesh Bank]
  3. Name and address of the Applicant [Original]
  4. Name, address, telephone number of the contact person [Original]
  5. A Feasibility Report on proposed banking company [In Bangladesh Bank’s format]
  6. Biographical Reports on sponsors/directors; CEO/MD; Head of operation, credit, finance, risk management, internal control, IT [In Bangladesh Bank’s format]
  7. Proposed compensation package and other terms of contract of the CEO [Original]
  8. Minutes of the shareholders (sponsors) meeting [Original]
  9. Written agreement by the shareholders to organize the banking company; [Original]
  10. A business plan [Original]
  11. Draft Memorandum and Articles of Association [Certified copies of original]
  12. Memorandum and Articles of Association [Certified copies of original]
  13. Joint Venture agreement, in case of foreign equity participation

Step by step all process

Step 1 Fess & Application submission: Applicant deposits fees through a Bank Draft in favor of Bangladesh Bank and submits a Letter of Application along with all required documents and information as specified in the guidelines (Annex I - V).

Step 3 Verification and Report Preparation: Officials from the Banking Regulation and Policy Department thoroughly verify and evaluate all submitted documents. If the documents meet the required standards, these officials prepare a satisfactory report. This report is then sent to the General Manager (GM) of the Banking Regulation and Policy Department for further review.

Step 4 Approval: The General Manager reviews, verifies, and signs the report before forwarding it to the office of the Deputy Governor (DG). The designated official in the DG’s office verifies the report, and the DG evaluates and signs it. The report is then sent to the Governor’s office, where the relevant official verifies it, and the Governor evaluates and approves the permit.

Step 4: Preparation and Collection of Establishment Certificate: Once the permit is approved by the Governor, officials from the Banking Regulation and Policy Department prepare the Certificate for the establishment of a new bank in the private sector. The Governor signs the Certificate, and the applicant collects it, marking the completion of the procedure for establishing a new private sector bank.

Fee Schedule

A bank draft in the amount of Taka 10 (Ten) lakh in favour of Bangladesh Bank

Official time limit

Depends on Satisfactory report of concerned offices

Actual time limit

Depends on Satisfactory report of concerned offices