BB revises rule to restrict entry of defaulters to bank boards

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Siddique Islam
Bangladesh Bank (BB) has asked the commercial banks to submit declaration mainly on loan status along with Credit Information Bureau (CIB) report while seeking approval on appointment of directors.
Under the new provisions, the banks will have to verify default loan position prior to appointment or re-appointment of directors in line with the CIB report, which should be attested by the chairman of the bank concerned.
Currently, the central bank verifies the loan status of the directors after the submission of declaration along with loan position.
The BB has taken the latest move against the backdrop of appointment of some directors in different banks hiding information on default loans and submitting false declaration.
"We require such reports aiming to stop concealment of facts by the directors on default loans," a BB senior official told the FE.
Three directors of a leading private commercial bank have already flied writ petition with the High Court to maintain their position in the bank, the BB official added.
The central bank issued a circular in this connection Thursday and asked the chairmen and the chief executive officers of all commercial banks to follow such instruction for ensuring good governance in the banking system.
"It has been recently detected that some loan defaulters are becoming directors of banks by concealing information about their loan position and making false declaration," the central bank said in its circular.
The circular also said the banks must submit an updated list of directors along with the declaration to ensure eligibility of the directors.
"There is no scope to appoint or re-appoint directors who have default loans," the BB official said, adding that the central bank is now monitoring the issue closely.