Tough penalties for cooperatives doing illegal banking business

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Shakhawat Hossain
The government has taken a move to impose tough penalties on cooperatives doing illegal banking business, official sources said.
The penalties at a maximum of Tk 2.0 million and a minimum of Tk 0.2 million in addition to seven years of imprisonment are on the card as the present government has decided to protect the general people from cheating by the dishonest sponsors of cooperative.
The Ministry of Finance (MoF) is going to specify the amount of fine in the Banking Companies Act 1991 to plug loopholes, which are being used by the cooperative companies for doing illegal banking business, sources added.
It has already sought opinion from the central bank on the issue against the backdrop of an alarming growth of such illegal banking business throughout country in recent years.
The concerned Bangladesh Bank wing has suggested such penalties against the cooperative companies, which will be found involved in illegal banking business, said a senior ministry official.
The official said there is no specific fine in the existing bank company act.
There are some 2000 cooperative companies in the country.
The companies are regulated by the ministry of Local Government and Rural Development under the cooperative act. Many of these companies have already found involved in illegal banking business for long to cheat innocent depositors.
Last year, the central bank identified some of the companies, which had long been collecting deposits from the people who were not their members and running commercial banking operations.
The companies are People's Cooperative Bank Limited, Pioneer Credit Cooperative Society Limited, East-Asia Multi-Purpose Cooperative Society Limited, Napa Islamic Cooperative Society Limited and Social Savings and Cooperative Limited.
The central bank through the MoF asked the Ministry of Home Affairs to take legal action against the companies and take stern action against such activities.
However, it could not take action against those companies due to intervention by the High court following petitions filed against the government action.