A proposal to establish a new scheduled bank under a public-private partnership (PPP) model has resurfaced at a time when Bangladesh’s banking sector is struggling with high non-performing loans, liquidity shortages and declining public confidence.

The proposed specialised bank, AFC Bank Limited, has reportedly been awaiting regulatory approval for eight years. Its promoter, Humayun Kabir Patwary, has urged the authorities to expedite the process and grant the bank a licence.

However, economists have questioned the need for another bank amid the sector’s existing problems. Several banks are currently facing capital and liquidity pressures, while initiatives are underway to merge weaker institutions.

Economist Professor Abu Ahmed said there is no need to establish new banks in the country. Instead, those interested in entering the banking business could acquire an existing bank, he suggested.

Dr Shahidul Islam Zaheed, chairman of the Department of Banking and Insurance at the University of Dhaka, also said there was no clear economic rationale for approving new banks given the current condition of the sector.

According to sources at the Ministry of Finance, Humayun Kabir Patwary has written to the prime minister seeking approval for AFC Bank Limited as a specialised scheduled bank.

The proposal says the bank would focus on expanding formal financial services among low-income and underserved communities and supporting the rural economy. Corrected version:

The promoter said conventional banking services have yet to adequately reach a large section of the country’s underserved population.

If approved, the proposed bank plans to provide agricultural loans on easier terms to small and marginal farmers. It also aims to finance people involved in livestock farming, poultry, fisheries and cottage industries.

The proposal further includes plans to channel savings of returning migrant workers into productive investments and encourage unemployed young people to become entrepreneurs, with the stated goal of boosting rural economic activity and government revenue.

Patwary said the Prime Minister’s Office instructed the Ministry of Finance on November 22, 2016 to resolve the matter. Despite submitting applications and required documents at different stages, he said the proposal has remained unresolved for eight years.

He alleged that the proposal has remained stuck in administrative procedures for years and called for a prompt decision from the authorities.

Corrected version:

The promoter said the prolonged delay has raised questions about administrative efficiency and the handling of proposals aimed at expanding financial services to underserved communities.