A move to put a limit on shareholding in bank companies by individuals, family members, and entities is facing strong opposition from the stakeholders, officials say.
The central bank in a draft for amending the bank company act has proposed that individuals, family members, and entities directly or indirectly will not be allowed to hold a significant volume of shares in more than one bank at a time.
It wanted to include the provision aiming to lessen the influence of any vested quarters on bank companies, keeping in mind the "bad experience" the banking sector had gathered in the recent past.
The Financial Institutions Division (FID) under the Ministry of Finance on Wednesday held a meeting on the proposed amendment to the Bank Company Act 1991 with FID Secretary Nazma Mobarek in the chair.
In the meeting, sources said, the representative of the Association of Bankers, Bangladesh (ABB) strongly opposed the move to put a limit on shareholding.
It argued that the general shareholders could not influence the policy decisions of the banks but the board of directors could do the same.
Also, it argued that since the number of board of directors from one family had been proposed to be lessened, there was no logic to put a limit on shareholding by individuals, family members, and companies.
On the other hand, central bank officials at the meeting said S Alam Group had wreaked havoc in Bangladesh's banking industry by holding the majority shares in half a dozen banks at a time.
They said due to their significant control over those banks, they influenced the policy decisions and looted billions from there, leaving hundreds of thousands of depositors in trouble.
The government was forced to inject Tk 200 billion of public money to compensate the depositors of five private banks that were merged into one late last year.
FID Secretary Mobarek told The Financial Express Wednesday she needed more time to finalise the proposed bank company act amendment.
She said the central bank and ABB officials had differences over the limit on shareholding of more than one bank companies at a time by any individuals, families, and entities.
"We have asked the central bank officials and ABB representative to come to the next meeting after reaching a consensus," she said.
ABB Chairman Mashrur Arefin told The Financial Express some faults occurred by the state in the banking sector in the past, some banks followed the wrong path, there was a lack in regulatory supervision, some things were operated by the government high-ups, and directed loans were granted.
"It will not be right to make a reactionary act now as an impact of those wrongdoings," he said. Arefin thinks the law can bar an individual from being a director of more than one bank, but barring him or her from buying significant shares of other banks will only obstruct the boosting of the capital market.
He suggested that an honest businessman with a good track record should not be barred from holding significant shareholding in more than one bank.
"Good governance and citizen rights to conduct business should not be positioned as opposing forces."
syful-islam@outlook.com
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