The state-owned banks and financial institutions have been facing tough competition from both the local private and foreign commercial banks as their market shares have been falling.

The market share of nationalised commercial banks (NCBs), now turned into public limited companies, declined by 4.7 percentage points while the private commercial banks (PCBs) including foreign ones increased by 2.1 percentage points and 4.5 percentage points respectively in 2006.

“In 2006, the NCBs held 32.7 per cent of the total industry assets as against 37.4 per cent in 2005. Evidently, NCBs’ domination in this area is showing a declining trend, while PCBs share rose to 47.7 per cent in 2006 as against 45.6 per cent in 2005,” the central bank said in its annual report for fiscal 2006-2007.

Besides, the shares of assets of the government-owned development finance institutions (DFIs) also fell to 7.8 per cent in 2006 against 9.7 per cent in the previous year.

The foreign commercial banks (FCBs) held 11.8 per cent of the industry assets in 2006, showing an increase of 4.5 percentage points over the previous year, the report added, published recently.

Total deposits of the banks in 2006 rose to Tk 1860.6 billion from Tk 1554.7 billion in 2005 showing an overall increase of 19.7 per cent, according to the BB’s annual report.

The deposit of the NCBs decreased from 40.0 per cent in 2005 to 35.2 per cent in 2006.

“The shares of government-owned commercial banks have gradually been declining due mainly to competition in the banking sector. PCBs and FCBs are providing better services to the clients,” a senior BB official told the FE Sunday.

On the other hand, PCBs’ deposits in 2006 amounted to Tk 955.5 billion or 51.3 per cent of the total industry deposit against Tk 731.3 billion or 47.0 per cent in 2005.

FCBs’ deposits in 2006 rose by Tk 38.2 billion or 33.9 per cent to Tk 150.8 billion from Tk 112.6 billion of the previous year. In 2006, the DFIs’ deposits were Tk 100.2 billion against Tk 89.5 billion in 2005 showing an increase of 12.0 per cent.

Currently, a total of 48 banks with 6562 branches are operating their business across the country.