The government moves to enact a new finance companies act for updating the existing overall regulations to ensure good governance in the sector.
Officials said the Finance Companies Act 2017 will replace the Financial Institutions Act 1993 and create an important provision that won't allow more than two directors from a family.
And the maximum number of directors of NBFIs can be raised to 15 from the existing 11.
Family means spouse, parents, siblings, children and any person dependent on the sponsor-directors, according to the officials.
"We've prepared the draft in consultation with stakeholders, including Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Leasing and Finance Companies Association (BLFCA)," a senior official of the Bangladesh Bank (BB) told the FE Monday.
He also said the central bank had already sent the draft to the Ministry of Finance (MoF) for its consideration.
A meeting is scheduled to be held in the MoF with Eunusur Rahman, Secretary of the Bank and Financial Institutions Division of the MoF, in the chair on February 22 to discuss the draft.
Talking to the FE, another BB official said the government was considering tightening some provisions in the existing law that is 23-year old to rein in irregularities and indiscipline in the sector.
Under the proposed law, the directors will be prohibited from holding simultaneously similar posts in multiple number of banks and NBFIs.
As per the draft, no director can continue for more than six years in two terms. One can become director again after taking a pause for one term.
"The NBFIs' investment in stock market may be tightened in the new law to minimize their risk," the central banker said, without elaborating.
Currently, 33 NBFIs are running their operations across the country.
Talking to the FE, Md Khalilur Rahman, acting chairman of the BLFCA, said the law is being updated to protect the interests of depositors.
Mr. Rahman, also managing director of the National Housing Finance and Investments Limited, said it will also help ensure corporate governance in the sector.
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