Merge weak banks with strong ones: analysts
In a burgeoning yet small economy of Bangladesh, there are an immense amount of business activities. To support these businesses, a total of 56 banks are in operation in the country. Fifty Six. Naturally, these banks are not large scale banks, which means their profit margin is limited. Consequentially, to survive in the banking business, profit making efforts are exerted: through high interest rates. In a
banking reforms forum, this fact was stated and many attested to having too many banks in the country.
In comparison with India, Bangladesh did not see a single merger between banks, despite having established guidelines on merger and acquisition of banks from as previously as 2006. India has experienced 34 such mergers in their economy, with 25 cases of private sector banks being merged with public banks. Although the issue in Bangladesh is raised from weak governance and failing institutions, apart from the numerous nature, there have been realities of healthy banks going through mergers in post-1999. In Malaysia, recent merges saw the banks merging to stand at a total of 6 from 16. It seems, with efficiency of commercial considerations, mergers can be beneficial during any stage of a banking institution.
State-owned banks are suffering the most. The political entanglements are creating a poor image and overall performance of those banks. Non performing loans of state banks are 20% compared to the 5% overall average. The Central Bank's diminishing authority over the banking industry's governance was addressed with critical remarks in the discussion.
Combined with constructive merger initiatives, there must be better governance for a more inclusive and restructurized banking industry.
banking reforms forum, this fact was stated and many attested to having too many banks in the country.
In comparison with India, Bangladesh did not see a single merger between banks, despite having established guidelines on merger and acquisition of banks from as previously as 2006. India has experienced 34 such mergers in their economy, with 25 cases of private sector banks being merged with public banks. Although the issue in Bangladesh is raised from weak governance and failing institutions, apart from the numerous nature, there have been realities of healthy banks going through mergers in post-1999. In Malaysia, recent merges saw the banks merging to stand at a total of 6 from 16. It seems, with efficiency of commercial considerations, mergers can be beneficial during any stage of a banking institution.
State-owned banks are suffering the most. The political entanglements are creating a poor image and overall performance of those banks. Non performing loans of state banks are 20% compared to the 5% overall average. The Central Bank's diminishing authority over the banking industry's governance was addressed with critical remarks in the discussion.
Combined with constructive merger initiatives, there must be better governance for a more inclusive and restructurized banking industry.
No comments:
Post a Comment