GUIDELINE TO ESTABLISH A BANKING COMPANY IN BANGLADESH, PART 2

1.     Required documents/ information/ analysis to be submitted to Bangladesh Bank

The application for approval to establish a new banking company shall be submitted to Bangladesh Bank with all the accompanying documents and information required, in the formats given in Annex I to Annex IV. Bangladesh Bank shall only consider applications that include the following:

  • A bank draft in the amount of Taka 10 (Ten) lakh in favour of Bangladesh Bank, attached to the Letter of Application, that serves as a nonrefundable application processing fee;
  • Name and address of the Applicant;
  • Name, address, telephone number of the contact person;
  • Feasibility Report on the proposed banking company (see Annex II), including an analysis of Bangladesh’s macroeconomic environment, financial system, as well as a business plan for the proposed bank, financial projections and sensitivity analyses;
  • Biographical Reports (see Annexes III and IV) and proof of citizenship for each promoter/director, CEO/MD and Heads of Operation, Credit, Finance, Risk Management ,Internal Control and IT of the proposed bank;
  • Proposed compensation package and other terms of contract of the CEO;
  • Minutes of the shareholders (sponsors) meeting;
  • Written agreement by the shareholders to organize the banking company;
  • Sponsors have to submit a business plan where management strategy of following sector should be elaborately defined;
  • Risk factors relating to assets of proposed
  • Strategy for reaching unbanked area specially disadvantaged locality/
  • A strategy to provide financial services to enhance Bangladesh’s competitiveness by reducing trade related banking fees/charges.
  • A strategy to provide banking services which could promote export diversification as well as to provide financial services for non‐traditional export sectors and small & medium
  • New bank should bring new/modern technology (e.g. mobile banking, internet banking) for providing better service to customers.
  • Draft Memorandum and Articles of Association;
  • For a corporate promoter; Board Resolution, Articles of Incorporation and By‐laws, list of directors and officers, list of shareholdings, audited financial statements for the latest two years, certified copies of the Memorandum and Articles of Association;
  • Joint Venture agreement, in case of foreign equity
  • In addition, the sponsors shall:
  • having received a Letter of Intent from Bangladesh Bank, the company shall apply to Bangladesh Bank for a formal license for commencement of banking business under Section 31` of the Bank Company Act, 1991, and for a license to open a place of business under Section 32 of said Act in the manner prescribed there under;
  • register the proposed company with the Registrar of Joint Stock Companies under the Companies Act, 1994, as a public limited Company, and;
  • obtain a Certificate of Incorporation subject to the approval by Bangladesh Bank of the draft Memorandum and Articles of Association;
  • after obtaining the license from Bangladesh Bank, the company shall apply to Bangladesh Bank for its scheduling under Article 37 of the Bangladesh Bank Order,

ANNEX I

LETTER OF APPLICATION 

Date:

 

General Manager

Banking Regulation and Policy Department Bangladesh Bank

Head Office Dhaka

Subject: Application to establish a Banking Company in Bangladesh.

Dear Sir:

In accordance with Section 31 of the Bank Company Act, 1991, we would like to apply to establish a Banking Company in the style of <Name of the proposed bank> in Bangladesh. As required, the documents requested by Bangladesh Bank are enclosed herewith.

We look forward to receiving your approval for the establishment of the proposed institution at your earliest convenience.

Sincerely yours,

 

Signature:

Name:

Proposed designation:

Address:

Telephone number:

email:

Encl: documents/information pertaining to the application

ANNEX II

Letter of Application shall accompany the A Feasibility Report and shall include the following:

  1. Macroeconomic Background/Environment in Bangladesh
  • GDP – Growth and Structure
  • Saving & Investment – Situation
  • Industrial Situation
  • Fiscal Situation
  • Foreign Trade Situation
  • Financial and Monetary Development
  1. Financial System and Structure
  • Banking and Financial Institutions
  • Composition of Deposits, Credit & Investment and their growth
  • Credit/Deposit Ratio (at the National Level and the proposed area of operation)
  • Investment/Deposit Ratio (at the National Level and the proposed area of operation)
  • Interest Rate Structure and Spreads
  • Volume of Off‐Balance Sheet Activities
  • Available Financial Instruments and the Need for Financial Innovation
  • Profitability Analysis
  • Shortcomings of the present system and scope for improvement
  • Justification for establishing a new bank
  1. Business Plan of the Applicant Bank supported by
  • Fundamental strategy of the proposed new bank to survive and grow
  • Schemes related to new financial instruments (if any) proposed
  • Branch Expansion Policy
  • Organization Structure, Management Skills & MIS
  • Technology Transfer
  • Areas of Operations
  1. Business Projection, Economic Justification and Financial Analysis
  • Capital Structure
  • Details of Fixed Asset Expenditures
  • Details of Operating Expenses
  • Details of Staff Expenses
  • Details of Preliminary Expenses
  • Market Share of Deposits, Credit & Investment
  • Basis of Interest Income, Other Income, Income from Off‐Balance Sheet Activities, Interest Expenses & Loan Loss Provisioning
  • Strategy of foreign exchange (i.e., treasury) business transactions and the projected income
  • Projected Annual Balance Sheet, Profit & Loss Account and Cash Flow Statement for at least 3 years
  • Statement of capital growth plan and fulfillment of Capital Adequacy Requirement
  • Strategy for dealing with risks encountered (e.g., credit risk, market risk, operational risk )
  1. SWOT (Strengths/Weaknesses/Opportunities/Threats) Analysis of the Applicant
  2. Strategy for survival and growth in the long run
  3. Sensitivity Analysis with interpretation:
  • Financial position if the Market Share of deposits & credits of the proposed bank is reduced by 10 percent at the national level, district level or proposed area of
  • Financial position if the Growth Rate of deposits & credits of the proposed bank is reduced by 10 percent at the national level, district level or proposed area of
  • Financial position if the Interest Rate Spread (weighted or un‐ weighted) of the proposed bank is limited to: 5 percent;

4 percent;

3 percent;

2 percent;

1 percent.

  1. Full particulars of the person(s)/firms who/which prepared the Feasibility Report shall have to be

ANNEX III

BIOGRAPHICAL REPORT ON SPONSORS/ DIRECTORS

  1. Full Name:
2. Date of Birth:

4. Citizenship: Passport Number:

Date and Place of Issue:

3.Place of Birth:
5.     Full Address:

(a)   Permanent:

 

 

Telephone Number:

(b) Present, if different from the Permanent:                  Telephone Number:

  1. Marital Status:

If married, Spouse’s Name:                                                                               Occupation: Spouse’s Passport Number:

Date and Place of Issue:

Near Relations (parents, children, brother, sister) and Dependents:

Name (First, Middle, Last)RelationshipAge

7.

EducationName &

Address of Institution

Dates of AttendanceMajor Area of StudyDegree

Awarded & Date

High School
Undergraduate
Graduate
Professional or Technical
Training

/Seminar

 

  1. Present Occupation: Organization Name:

Business Address:

Nature of Business:

Job Title:

Telephone Number:

  1. Business Record (pertaining to the preceding 10 years) Use additional sheets, if
Name & Address of OrganizationDates of EngagementPosition HeldResponsibilities

 

  1. Describe each enterprise, including the name, address, type of enterprise [public (listed or not), private] your percentage of ownership and the type of business of each enterprise or other entity which you own or control. (Control means ownership of 10% or more of the stock or ability to effectively control the management of the enterprise or other entity).

List names, addresses and percentage of control and/or ownership of other incorporators, partners and directors of the entity or enterprise referred to above.

Do you perform any services for or have any business connections with any institution which is subject to the supervision of Bangladesh Bank, or any other authority of the government of Bangladesh?Yes ( )No ( )
If “Yes,” indicate the name of the institution, address and nature of your work.

 

Being a sponsor of a proposed bank, how and from what sources will you pay for your proposed amount of share capital? 

Yes                      No

(a)      Own cash(   )                      ( )
(a)       Other sources

If “Yes,” give details

(   )                      ( )

 

  1. Tax Identification Number (TIN):

(Attach most recent returns and/or Tax Clearance Certificates, and certified IT10B Forms).

  1. Are you disqualified from election or nomination or from occupying the office of Bank Director owing to the following circumstances?
  • You have less than 10 years of professional experience,
  • You are insane or mentally unsound,
  • You are insolvent and adjudicated bankrupt,
  • You have been convicted by a court in any criminal offense or have been involved in any fraud/forgery, financial crime or other illegal activities,
  • You are a Director of any other banking company,
  • You are a partner in any contract with a banking company in the capacity of legal advisor, advisor, consultant,
  1. Answer to any of the questions below if they apply to you as an individual, or a partner, director or officer of an

Except for minor traffic violations:

(a) Are any arrests, indictments, criminal information or other Criminal proceedings now pending against you?Yes ( )No ( )
(b) Were you ever convicted for any violation of the law?( )( )
(c) Have you or has any partnership of which you were a Principal officer or major stockholder ever been judged Bankrupt? 

( )

 

( )

 

(d) Has any business in which you were a director, officer, partner or major shareholder (5% or more of the voting shares) defaulted on its servicing obligations (principal and/or interest) on outstanding debt or been involved in unacceptable foreign exchange transactions? 

(   )                ( )

(e) Has any enterprise in which you were a partner, director, or officer been the subject of criminal indictment or other criminal proceedings? 

(   )                ( )

 

  1. As a sponsor of this proposed bank, I agree to hold at least Taka 1.00 crore (or its equivalent) or an amount not exceeding 10% share of the equity capital to be issued by the proposed

The undersigned affirms that the statements made and answers given herein are accurate and complete and hereby authorizes the Bangladesh Bank to make any inquiry it deems appropriate in connection with processing this questionnaire. False statements in this questionnaire will be sufficient cause for denial of a license to establish banking operations in Bangladesh.

Signature of Sponsor/ Director: Name:

Date:

Place:

Witnesses:

Signature

Signature

Name: Address:

Name: Address:

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