Bangladesh Samabaya Bank Ltd, under the Department of Cooperatives, is due to become a specialised commercial bank.
State Minister for Rural Development and Cooperatives Swapan Bhattacharjee told The Business Standard that the bank will start functioning as a specialised commercial bank after a law is passed in parliament. The Law Commission has already prepared a draft law to transform the cooperative bank without disrupting its ongoing activities.
Law Minister Anisul Haque is hopeful that the law will be passed during the next parliamentary session.
According to the draft law, any person or organisation will be able to carry out money transactions through the bank once it starts operating as a commercial bank.
An initiative was taken in 2016 to turn the cooperative bank into a commercial bank. At the time, an inter-ministerial committee was formed with representatives from nine ministries. The committee requested the Law Commission to draft a law for the purpose.
"We are expecting to receive the draft in a couple of days. Once we receive it, we will start the next course of action," State Minister Swapan Bhattacharjee said.
Commercial cooperative banks operate in various countries, including: India, Nepal, Sri Lanka, Thailand, Malaysia, and the Philippines. These banks make significant contributions to national economies by running cooperative activities as well as playing the roles of specialised agricultural, industrial or commercial banks.
Samabaya Bank will be able to play a similar role once it has been converted into a commercial bank.
In 1922, the Bengal Provincial Co-operative Bank was founded to provide loans to farmers in Bengal. In 1947, the bank was temporarily closed following the Partition of India.
The bank was placed under the East Pakistan provincial co-operatives ministry in Dhaka and renamed East Pakistan Provincial Co-operative Bank Ltd in 1948. It was renamed Bangladesh Jatiya Samabaya Bank Ltd after the independence of Bangladesh. The name was again changed in 1977 to Bangladesh Samabaya Bank Ltd.
Until 2000, the bank was listed as a specialised bank by the Ministry of Finance. In 2001, the bank was listed as a non-banking financial institution.
At present, about 1.9 lakh cooperative societies operate in Bangladesh with 1.15 crore members.
The members of the co-operative societies can deposit money in Samabaya Bank and take out loans for various activities, including agriculture and small businesses. The paid-up capital of the co-operative bank is Tk100 crore. The authorised capital is Tk500 crore.
Mominul Haque Talukder, chief executive officer of Samabaya Bank, said that, at present, only members of the cooperative societies can carry out money transactions through the cooperative bank.
As a specialised commercial bank, it will be able to operate like any other commercial bank. However, Samabaya Bank will be considered a specialised bank because it will conduct cooperative activities as well as commercial activities, he added.
With the passing of the law, branches will be opened across the country, first at the regional level. All the co-operative societies under the Samabaya Bank will function under the local branches, he continued.
Rezaul Ahsan, secretary of the Department of Cooperatives, said it will be easier to stop illegal banking in the name of co-operative societies if the co-operative banks are converted into specialised commercial banks.
"Ordinary people will not be deceived anymore," he added.
Former governor of Bangladesh Bank Mohammed Farashuddin said strict monitoring should be in place to make sure that the co-operative bank does not turn into "another bad government bank."