BB penalises 3 banks for violating rules
Wednesday, 20 June 2007
FE Report
The Bangladesh Bank (BB) has penalised three commercial banks for violating its rules on constitution of board of directors, the BB sources said.
In a punitive action the central bank said it will not issue authorised dealer (AD) licences to the banks for operating foreign exchange banking. They will not also be allowed to open new branches, the sources said.
The banks are -- United Commercial Bank Ltd (UCBL), Al-Arafah Islami Bank Ltd and Social Investment Bank Ltd (SIBL).
The sources said the UCBL did not hold any annual general meeting (AGM) during the last eight years and did not also pay any dividend to the shareholders.
The AGM of the bank could not be held due to a restriction imposed by a court following a case filed by a section of the board of directors.
Recently, the court ordered the bank to hold AGM for three years at a time, but the bank did not act accordingly.
A UCBL source, however, said the bank has yet to receive any written order from the court in this connection.
A central bank official said the BB recently summoned the managing director of the UCBL and asked him to hold the AGM.
He said although a commercial bank should have 13-member board of directors, the UCBL has a total of 17 members in its board.
Of the bank's 17 directors, there are fourteen members from a same family and most of them held the post for more than six year in a row in violation of the central bank rules, the source said.
He said although the SIBL has downsized the number of directors to 13 from 23, most of them have already completed the central bank given time limit of consecutive six years.
A high official of the SIBL said the bank directors, who have completed a six-year period, are ready to leave the position. But it is being delayed as the bank is currently issuing rights share.
On the other hand, Al Arafah Bank Ltd has also a 23-member board of directors, who have completed the stipulated six-year period.
The bank source said the Al Arafah could not cut the number of board of directors as one of its directors filed a case in court.
However, he said the bank has already taken step to recast the board of directors as per the central bank directives.
The Bangladesh Bank (BB) has penalised three commercial banks for violating its rules on constitution of board of directors, the BB sources said.
In a punitive action the central bank said it will not issue authorised dealer (AD) licences to the banks for operating foreign exchange banking. They will not also be allowed to open new branches, the sources said.
The banks are -- United Commercial Bank Ltd (UCBL), Al-Arafah Islami Bank Ltd and Social Investment Bank Ltd (SIBL).
The sources said the UCBL did not hold any annual general meeting (AGM) during the last eight years and did not also pay any dividend to the shareholders.
The AGM of the bank could not be held due to a restriction imposed by a court following a case filed by a section of the board of directors.
Recently, the court ordered the bank to hold AGM for three years at a time, but the bank did not act accordingly.
A UCBL source, however, said the bank has yet to receive any written order from the court in this connection.
A central bank official said the BB recently summoned the managing director of the UCBL and asked him to hold the AGM.
He said although a commercial bank should have 13-member board of directors, the UCBL has a total of 17 members in its board.
Of the bank's 17 directors, there are fourteen members from a same family and most of them held the post for more than six year in a row in violation of the central bank rules, the source said.
He said although the SIBL has downsized the number of directors to 13 from 23, most of them have already completed the central bank given time limit of consecutive six years.
A high official of the SIBL said the bank directors, who have completed a six-year period, are ready to leave the position. But it is being delayed as the bank is currently issuing rights share.
On the other hand, Al Arafah Bank Ltd has also a 23-member board of directors, who have completed the stipulated six-year period.
The bank source said the Al Arafah could not cut the number of board of directors as one of its directors filed a case in court.
However, he said the bank has already taken step to recast the board of directors as per the central bank directives.