Country’s two commercial banks have backtracked on their decision to open their branches in Kingdom of Saudi Arabia (KSA), officials said.
Janata Bank and Standard Bank Ltd (SBL) were set to open their branches in KSA and the Bangladesh Bank (BB) gave them no-objection certificates (NoCs) in this regard, they added.
When contacted, the authorities of the two banks said although they decided to set up their branches in Saudi Arabia earlier, they are not interested to open branches at this movement.
However, the authorities of state-owned Sonali Bank have showed interest to open a branch in the Arab country.
The authority of Social Islami Bank Limited (SIBL) is also working to open its branches in Makkah/Jeddah in line with the condition/policy of the Islamic state.
In this regard, the bank authority has appointed a counselling firm. The central bank has already given them NoC for taking licence from the Saudi Arabian Monetary Authority.
SIBL will be operating its branch in KSA as per conventional and Shariah-based banking, a high official of the private bank said, adding that they are now working on opening branches as early as possible.
“In 2016, we gave permission to the two private banks to open their branches in KSA. Besides, we granted permission to state-owned Janata Bank in 2017 to open branches,” a central banker said.
Now Janata Bank and SBL are not agreed on opening their branches in KSA. But state-run Sonali Bank has shown interest to open its branch there, he said.
Earlier, the Saudi government allowed Bangladeshi banks to open branches there to facilitate sending home remittances by Bangladeshi expatriates.
It has been possible after long persuasion by the government of Bangladesh and the Bangladesh mission in Saudi Arabia, a foreign ministry official told the FE.
The Bangladesh mission in Riyadh sent a letter to the foreign secretary in July last, asking him to take necessary measures in this regard.
Later, the letter was forwarded to the finance ministry for taking necessary steps by the foreign ministry, he added.
The embassy of Bangladesh in Riyadh would suggest that the authorities concerned should convince interested Bangladeshi banks to submit their applications for licences to set up their branches in Saudi Arabia without further delay, according to the embassy letter.
Private bankers think that setting up bank branches in KSA will be a challenge for the private or state-owned banks.
“No bank branch can survive there only by collecting remittances. They will have to provide other banking services,” a senior banker said.
At present, Bangladeshi banks are collecting remittances through banking arrangements, exchange houses and money transfer companies.
Bangladesh is one of the largest recipients of remittance. And KSA has been the largest hub of foreign remittance into Bangladesh.
The United Arab Emirates (UAE), Qatar, Oman, Bahrain, Kuwait, Libya, Iraq, Singapore, Malaysia, the USA and the UK are also major sources of remittance inflow.
Bangladeshi banks have long been collecting remittances from KSA through banking arrangements along with different banks. Now they will become competitors if Bangladeshi bank branches are opened there.
The country received $14981.69 million in remittance in the fiscal year (FY) 2017-18. Of the total amount, it bagged $9232.25 million from top five destinations with Saudi Arabia being the largest source of remittance.
Non-resident Bangladeshis (NRBs) living in KSA sent $2591.58 million in FY ’18.
Bangladeshi overseas workers have been suffering a setback while remitting their hard-earned money due to an inadequate number of branches/agent points in Saudi Arabia.
Janata Bank runs its business with 912 branches across the country including four overseas branches in the UAE.
The state-run bank has already adopted a two-year action plan approved by its board of directors. A plan is also underway to appoint 35 agents in 2019 under the action plan for remittance collection.