Co-op societies to be barred from using word 'bank'
Wednesday, 24 October 2007
FE Report
The co-operative societies will be barred from doing banking business using the word 'Bank' in their day-to-day operation, official sources said.
The government has already amended the related clauses of the existing Bank Companies Act imposing restriction on the use of word, 'Bank', by any companies and establishments to protect innocent depositors.
Besides, a committee is likely to finalise the draft amendment of the existing cooperative act and cooperative guidelines at a meeting scheduled to be held today (Wednesday), which will be submitted to the ministry concerned for taking necessary measures.
The Ministry of Local Government, Rural Development (LGRD) and Cooperatives earlier formed a five-member committee, headed by Additional Registrar, Department of Cooperatives, Saiduzzaman, for preparing a draft on amendment of the related rules and regulations in this regard.
The government took the measure to amend the existing cooperative act and cooperative guidelines to plug the loopholes, which are being used by a section of cooperative societies for doing illegal banking business across the country.
Sources, however, said the Bangladesh Bank (BB) earlier recommended to the government for amendment of the existing Bank Companies Act for stopping use of the word, 'Bank', by any companies, along with establishments, particularly the cooperative societies.
The government has already published the Bank Companies (Amendment) Ordinance 2007 imposing restriction on the use of the word, 'Bank', by any companies and establishments instead of any companies earlier.
"We have recommended amendment to such clauses to protect innocent depositors' interest," a BB senior official told the FE explaining the main object of the amendment of the law.
The government is taking the measures against the backdrop of an alarming growth of such illegal banking businesses by a section of cooperative societies throughout the country.
"We may finalise the draft amendment of the rules and regulations at today's meeting," a member of the committee told the FE Tuesday, adding that the committee is likely to recommend imposing restriction on insurance business by the cooperative societies.
Under the proposed amendment, no cooperative society will be allowed to collect deposits or extend loans from, and to, members of the public or organisations other than its members.
Sources, however, said a section of cooperative societies has long been collecting deposits from the people who are not their members and running commercial banking operations.
"We want to stop such illegal businesses run by a section of cooperative societies taking advantage of loopholes in the existing rules and regulations," the member added.
Currently, eight cooperative societies are operating their businesses using the word 'Bank', according to the department of cooperatives.
Earlier, the department of cooperatives formed five taskforces to stop illegal banking business run by some cooperative societies across the country.
The taskforces found at least 18 cooperative societies, which are using the word 'Bank' in the documents relating to their operation.
The co-operative societies will be barred from doing banking business using the word 'Bank' in their day-to-day operation, official sources said.
The government has already amended the related clauses of the existing Bank Companies Act imposing restriction on the use of word, 'Bank', by any companies and establishments to protect innocent depositors.
Besides, a committee is likely to finalise the draft amendment of the existing cooperative act and cooperative guidelines at a meeting scheduled to be held today (Wednesday), which will be submitted to the ministry concerned for taking necessary measures.
The Ministry of Local Government, Rural Development (LGRD) and Cooperatives earlier formed a five-member committee, headed by Additional Registrar, Department of Cooperatives, Saiduzzaman, for preparing a draft on amendment of the related rules and regulations in this regard.
The government took the measure to amend the existing cooperative act and cooperative guidelines to plug the loopholes, which are being used by a section of cooperative societies for doing illegal banking business across the country.
Sources, however, said the Bangladesh Bank (BB) earlier recommended to the government for amendment of the existing Bank Companies Act for stopping use of the word, 'Bank', by any companies, along with establishments, particularly the cooperative societies.
The government has already published the Bank Companies (Amendment) Ordinance 2007 imposing restriction on the use of the word, 'Bank', by any companies and establishments instead of any companies earlier.
"We have recommended amendment to such clauses to protect innocent depositors' interest," a BB senior official told the FE explaining the main object of the amendment of the law.
The government is taking the measures against the backdrop of an alarming growth of such illegal banking businesses by a section of cooperative societies throughout the country.
"We may finalise the draft amendment of the rules and regulations at today's meeting," a member of the committee told the FE Tuesday, adding that the committee is likely to recommend imposing restriction on insurance business by the cooperative societies.
Under the proposed amendment, no cooperative society will be allowed to collect deposits or extend loans from, and to, members of the public or organisations other than its members.
Sources, however, said a section of cooperative societies has long been collecting deposits from the people who are not their members and running commercial banking operations.
"We want to stop such illegal businesses run by a section of cooperative societies taking advantage of loopholes in the existing rules and regulations," the member added.
Currently, eight cooperative societies are operating their businesses using the word 'Bank', according to the department of cooperatives.
Earlier, the department of cooperatives formed five taskforces to stop illegal banking business run by some cooperative societies across the country.
The taskforces found at least 18 cooperative societies, which are using the word 'Bank' in the documents relating to their operation.