Not more than 2 of a family to be bank directors

 From now on, not more than two members of a family could remain as directors of a bank as per the Bank Companies Act (amended) 2013.  

“The central bank has asked all the banks to strictly follow this rule,” deputy governor of Bangladesh Bank SK Sur Chowdhury told reporters while briefing on the proceedings of the bankers’ meeting with the central bank held on Monday.

Bangladesh Bank governor presided over the meeting while managing directors and chief executive officers of the public and private banks and financial institutions were present at the meeting.

The BB deputy governor said on completion of one year of the amendment to the Bank Companies Act 2013, the new provision came into effect which stipulates that not more than two members of a family could remain as director in the board of a bank or any financial institutions.

President of Association of Banks, Bangladesh (ABB), a representing body of top bankers, Ali Reza Iftekhar, who attended the meeting, said if any violation of such provision takes place, the bank management should report it to the chairman of bank concerned and also to the Bangladesh Bank.

At the meeting, the Bangladesh Bank governor asked all the banks to strictly follow the “fair business practice” in banking operation against the backdrop of the recent scams in credit disbursement which took place in different public and private banks.

“They (banks) have also promised to follow the guidelines strictly,” said the deputy governor at the briefing.

The corruption at state-owned specialised BASIC Bank has caused misappropriation of Tk 4,500 crore in recent days.

SK Sur Chowdhury informed that the central bank’s monetary policy is scheduled to be announced on July 26. The meeting was convened to exchange views with banks’ executives and put some indications of the next monetary policy ahead of the policy announcement.

He said all the banks have been asked to lower the bank spread with 5 percent and lower the interest rate as well from the present market rate of about 15.5 percent.

The BB official said the central bank asked the commercial banks to increase their credits for the private sector to stimulate investment.

Noting that some 15 banks have been maintaining higher stock market exposure limited which is not permissible as per Bank Companies Act 2013, he said the banks have been asked to bring down its stock market exposure limit below 25 percent.

These 15 banks have been asked to submit a phase-out plan in this regard to bring down their exposure limit by June 2015, he said.

Under the amended law, any bank cannot invest more than 25 percent of its total capital to the stock market.

The meeting discussed pending bill payment of Sonali Bank and the Bangladesh Bank has asked the nationalised commercial bank to settle its bill payment disputes with other banks with September 2016 in phases.

Replying to a question, SK Sur Chowdhury acknowledged that the country’s investment scenario is bad. He, however, said it has not yet become worrisome.

Ali Reza Iftekhar said the chief executives of the banks see the non-performing loan (NPL) as the biggest challenge for the banks right now.

“NLP puts an adverse effect on banking business. So, we welcome central bank’s directives to strictly follow the guidelines in credit disbursement.”

Source: UNB

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