BB hikes capital requirement for new banks

Bangladesh Bank yesterday said that the upcoming commercial banks in the country will have to ensure Tk 500 crore as paid-up capital instead of the existing Tk 400 crore requirement.

A central bank official said the new rule will be applicable to all who apply for licences to open new banks.

Bangladesh Bank yesterday issued a circular to this end.

Asked why the measure is not applicable for existing banks, the official said many of them cannot immediately raise their capital base. This includes state-run banks, which have long been struggling to manage their required capital.

He went on to say that the central bank had taken the decision to raise the paid-up capital requirement before the coronavirus pandemic, but it did not implement the rule given the business slowdown.

He hinted that the central bank might raise the requirement even further in the days ahead.

The central bank also set a paid-up capital requirement of Tk 125 crore for digital banks.

The central bank board had approved guidelines for digital banks on June 14.

The Bangladesh Bank official said digital banks would not need huge infrastructures like traditional ones.

So, the amount of paid-up capital required by digital banks is lower than their traditional counterparts, he added.