Appointment of chairman and directors to state-owned banks, insurances, and financial institutions will now have to go through a scrutiny committee led by the financial institutions division (FID) secretary.
Officials say the government will form the gateway panel under decision made at a meeting Sunday, in the process of changes aimed at much-envisaged good governance in the financial sector.
The decision comes as the FID, under the Ministry of Finance, has got down to reviewing a draft policy on appointment of chairman and directors to ensure good governance in the sector.
Proposals for appointment of directors to those banks, insurance companies, and financial institutions are currently forwarded to the Prime Minister's Office without a formal scrutiny as there is no designated body assigned to the task.
Sheikh Mohammad Salim Ullah, FID secretary, presided over the meeting held a few days after a loan-negotiating team of the International Monetary Fund (IMF) had suggested the government lower the number of bureaucrats from the line-up of directors in the banks, insurances, and financial institutions.
These in-service and ex-bureaucrats have insufficient knowledge on banking rules and loan-proposal review and so the IMF wants that directors should be appointed with capable persons following proper criteria.
Political persons used to dominate banks' boards which are now under control of present and former civil servants.
In the wake of multifarious problems plaguing these institutions, both in public and private sectors, there have been pleas from economists and policy think-tanks for streamlining their top management.
Concerns include ballooning non-performing loans, insider lending, forged loans, money laundering amongst others.