BB restricts banks’ land, floor space purchase

July 31, 2012

The Bangladesh Bank has decided that commercial banks will not be allowed to purchase or lease for 10 years or more any lands, buildings and floor space for any purpose other than use by their head offices.
However, in areas under the jurisdiction of city corporations, they can buy or lease office space for their branches. The central bank, in a circular issued on Monday, informed the banks of the decisions that were made in response to allegations that the banks were purchasing land, buildings and floor space for the sake of profit.
The BB also sent a chart to the each bank, asking it to fill it up and submit it to the central bank when it purchases land, building and floor space.
The banks were asked to furnish information on the size of the land or floor space, the price, purpose of purchasing, whether any of the bank directors owned the land or floor space, and the volume of the total assets of the bank and addresses of the assets.
In January 2010 the BB asked all banks to take prior permission from it for purchasing land, floor space or any other permanent structure.
BB officials said that some of the banks continued to purchase land or permanent structures, showing fake needs.
They said that banks had purchased lands and spaces worth hundreds of crores of takas, virtually engaging in land business, to make profits.
Officials said that many of the banks purchased land or floor space on the outskirts of the city or in district towns.
They pointed out that a bank could purchase land for setting up its head office or branch offices. But the locations they mentioned are not suitable for these. So, it is assumed that the lands have been bought to make profit by selling them.
A BB official said that after these banks purchased lands, their prices in the areas concerned went up in the last few years.
The central bank has also received allegations of corruption in the purchase of lands by banks. In many cases owners are selling low quality lands or lands with legal complications to banks at higher prices.

-With New Age input

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