Govt moves to frame \\\'Finance Company Act\\\'

Rezaul Karim | Published: November 02, 2015 00:00:00 | Updated: November 30, 2024 06:01:00

The government has initiated a process of framing a law titled 'Finance Company Act 2015' with the abolition of existing age-old 'Financial Institution Act 1993.'
As part of the move, the government will sit with stakeholders to finalise the draft 'Finance Company Act' (FCA) aiming to make the act time-befitting, officials said.
"The Bank and Financial Institution Division (BFID) under the Ministry of Finance (MoF) is going to hold an inter-ministerial meeting sometime next week to scrutinise opinions on the draft 'Finance Company Act 2015," deputy secretary of the BFID Md Rizwanul Huda told the FE on Sunday.
The meeting will elaborately discuss the stakeholders' opinions on the new act, he added.
The Bangladesh Bank (BB) earlier sent a draft of new 'Finance Company Act 2015 which was updated by the BFID, he added.
The draft had already been sent to the agencies concerned including the commerce ministry, the central bank and the Bangladesh Securities and Exchange Commission, seeking opinions on the new act, he mentioned.
The government is expected to finalise the new 'Finance Company Act' within next six or eight months, a senior official of the division said, adding that it would replace the Financial Institution Act with a massive qualitative change in the regulating system of the sector.
The number of financial institutions, total assets, lease and investment etc. has been increased. At present, it is urgent needed to update the legal structure of the sector and meet the demand of time. As a result, the BB has proposed framing new FCA-2015, eliminating the existing one, he said.
Tightening aggressive lending by the financial institutions will decrease if the law is implemented properly, according to the draft FCA-2015.
For becoming a director of the board, a number of conditions has been included in the proposed act.
No finance company will be able to appoint more than 16 directors including independent director.
Maximum two members of a family may become the directors of a finance company if they hold more than 05 per cent share while one director may be appointed from a family having less than 5 per cent stake in a finance company.
Any incumbent director of a finance company cannot become the director of other finance institution at a time, according to a provision of the proposed act. Â
The proposed act states that the BB can cancel licence of any finance company citing a valid reason.
The finance act, 2015 would be sent to the cabinet for approval after finalising it.
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