Banks and financial institutions (FIs) will be barred from taking deposit if those fail to pay premium to central bank's Deposit Protection Trust Fund for two consecutive terms, according to a Bill placed in parliament on Sunday.
Besides, compensation for depositors will be doubled in case of liquidation of banks and FIs.
Such provisions have been incorporated in the Bank Deposit Insurance (Amendment) Bill laid in parliament Sunday, aiming to enhance measures to protect depositors' interests.
"If any bank or financial institution fails to pay premium for consecutive two terms, the Bangladesh Bank can ask it to refrain from taking deposits after providing the opportunity of hearing," says the proposed law placed by Finance Minister AHM Mostafa Kamal.
Presently, the term is not fixed as it says "more than one'.
The amendment also proposes fines on the banks or financial institutions concerned for the period of delay. In this case they have to pay the interest on the premium money as per the bank rate.
The bill said that after liquidation the depositors of the concerned bank or financial institution will be repaid their due arrears or at least Tk 2.0 lakh, whichever is lower, by the protection trust fund under the central bank.
Presently, the amount to be paid to the depositors is maximum one lakh.
While placing it the finance minister said, "The bill aimed at providing better protection for the depositors with the banks and financial institutions in the country."
The bill was sent to the parliamentary standing committee on finance ministry for submitting reports after vetting.
As per law, depositors have to be paid in 180 days of the liquidation of any bank or financial institution.
The liquidation takes place if a bank or financial institution fails to pay premium repeatedly.
There is a Deposit Protection Trust Fund under the Bangladesh Bank and commercial banks and financial institutions are insured with this trust fund.
If the money deposited with the Fund is not enough to come to the amount payable to the depositors, then the government has to borrow money from the central bank to repay the depositors' money.
mirmostafiz@yahoo.com
