IMF wants BB to be all powerful

FE Team | Published: September 27, 2012 00:00:00 | Updated: February 01, 2018 00:00:00

Nazmul Ahsan
The International Monetary Fund (IMF) has asked the government to empower the Bangladesh Bank (BB) with the authority to dismiss bank directors, managing directors and abolish boards of directors of four state-owned commercial Banks (SCBs), if needed.
The proposal of the IMF has been given to the government to ensure a level playing field for both private commercial banks (PCBs) and SCBs as provisions envisaged in the existing Bank Company Act (BCA) clearly place a bar on the BB to exercising the power of dismissal in the case of SCBs, but make it lawful in the case of PCBs.
A number of clauses of the current BCA, 2003 (amended) will have to be amended by the government to accommodate the proposal of the IMF, about which the Ministry of Finance (MoF) is still hesitant, a top finance ministry official said.
The IMF team on Extended Credit Facility (ECF) that concluded its two-week visit to the country Wednesday last, made the recommendation to the government, sources in the BB and the MoF said.
The IMF team held its final discussions on last Tuesday and Wednesday at the conference room of the finance ministry. Finance Minister AMA Muhith, top officials of the MoF and the BB attended a series of meetings with the visiting IMF team members.
The IMF also asked the BB to conduct a special inspection of the entire credit functions of Sonali, Janata, Agrani and Rupali banks as their recent loan scams, particularly that involving Hallmark Group have irked the multilateral lending agency, a source said.
"The IMF has asked to amend the BCA to empower the BB with the authority to remove directors and MDs of SCBs and get rid of the present boards of four SCBs, if situation demands," a senior finance official told the FE on Wednesday.
"We are convinced of the proposal of the IMF, but not sure about the monitoring power of BB," he added.
According to the provision of Clause 46(6) of BCA, 2003(amended), the BB cannot remove the government-appointed bank directors, chairmen and MDs. It could only submit report to the government about the malpractices indulged in by them, if the same take place in the banks concerned, the provision says.
The Clause 47 of the same Act also bars the BB from abolishing boards of government-owned banks. The appropriate authority of the BB after meeting certain conditions and formalities could fire bank directors, managing directors (MDs) and abolish the board of directors of PCBs, stipulates the BCA, 2003.
Officials at the MoF said, a high-powered committee, commissioned by the ministry, recommended amendment to the Bank Company Act (BCA), 2012, with the provision of empowering the BB with the authority to remove bank directors, managing directors and abolish board of directors of four state-owned commercial banks (SCBs).
"Now, it's a political decision the government has to make," a high official at the ministry told the FE on Wednesday.