WB for limiting bank directors in line with caretaker govt ordn

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Nazmul Ahsan
The World Bank (WB) wants the government to amend the Banking Company Act, 1991 in line with the ordinance promulgated by the immediate past caretaker administration limiting the number of bank directors to 13 and increasing the fines for banking frauds.

The ordinance got expired following non-placement of the same in the first session of the present parliament for adoption.
The WB has also strongly recommended compulsory training for all directors of the commercial banks to help improve governance in banking sector of the country.
The recommendations of the multilateral development agency, contained in a draft aid-memoire, have recently been submitted separately to the Ministry of Finance (MoF) and the Bangladesh Bank (BB).
An Implementation Support Mission on Enterprise Growth and Bank Modernization, which visited Dhaka between November 15 and 25, made the recommendations, sources in the BB said.
The MoF is yet to decide on its position on the WB recommendations. However, the BB supports the WB proposal.
The WB has given a set of recommendations to bring discipline and strengthen governance in banking sector, a top official in the BB said.
"BB supports the recommendations of the WB to establish the maximum possible good governance in the banking sector," he added.
The ordinance promulgated by the caretaker government limited the number of directors on a bank board to a maximum of 13. But the Bank Company Act, 1991 (amended) has not limited the number of bank directors. The commercial banks appoint directors as per their respective Articles of Association, banking sources said.
The ordinance further said that a maximum of two members of a single family could be appointed as directors of a banking company if the family concerned owned more than five per cent share of that bank.
Furthermore, the ordinance said a maximum one director from a single family could be appointed as director of a banking company if the family concerned owned up to five per cent share of that bank.
The Bank Company Act has no such provisions.
If any person involves himself/herself in banking business without having any license, he or she would face seven years imprisonment and be fined between Tk 0.2 million and Tk 2.o million, the ordinance said.
The Act has provision for only seven years imprisonment.
The ordinance has also increased the amount of fines by 10 to 20 times for indulging in a number of banking frauds. But the fines are negligible for the same crimes in the Bank Company Act.
Officials in the MoF said they are yet to finalise their position in adopting the ordinance as the issue has both financial and political implications.
"It's a political government. So, any change to be brought in the Bank Company Act must meet both political needs and economic urgencies,' a top MoF official told the FE.