Muhith hints extension of bank directors’ tenure

Finance Minister AMA Muhith yesterday hinted that the tenure of private commercial banks’ directors might be extended up to 12 years from exiting six years. “The tenure of directors of private commercial banks can be extended up to 10-12 years,” Mihith said after a meeting with the bank owners at the secretariat. The finance minister’s announcement comes in response to the long-desired demand of Bangladesh Association of Banks (BAB) –a conglomerate of banks. Since issuance of orders on April, 2013, by the Bangladesh Bank (BB),  BAB  continued to urge the central bank to revise its orders. Terming the orders illogical, BAB earlier said implementation of the orders would adversely affect the growth of private banks in Bangladesh. “However, it is a law. So I myself cannot take decision, but I will seek consent from Prime Minister Sheikh Hasina in this regard,” said the minister. According to the BB orders, the tenure of the private banks’ sponsor directors would be maximum six years at a stretch in two terms, and another circular restricted the number of directors at 13 on the board of each bank. The central bank issued the circulars following the passage of the Bank Company (Amendment) Act 2003 on March 9, 2013. Replying to a question, Muhith said it is not legitimate to pick a loan defaulter as director of a private commercial bank as the individual is not qualified for the post. “I think the unified policy will be formulated for  appointing  of the board of director of bank,” he said. “According to the last amendment of  Bank Law, the private banks need to take consent  of Bangladesh Bank to appointing directors and managing directors for private commercial banks.” Private bank owners want not to take consent from Bangladesh Bank for appointing their director as they said they are the owner of the banks and elected from voting rights of ordinary shareholders, he said. The finance minister said: “Foreign private commercial banks are run by their founders, but in our country founders need to leave the bank, according to the bank company act.” “That is why local bank owners  also want founder director  of a private commercial bank will be a part of the bank after six years of tenure.” He said: “Bank owners also want legal amendment to the bank company act within December to solve their director appointment problems.” Sources in the meeting said BAB Chairman Nazrul Islam Mazunder also demanded cancellation of the provision of taking consent from Bangladesh Bank to appointing directors of private commercial banks. About the lifetime director of a bank, he claimed that he did not talk to any print media for appointing of director of private commercial bank. The BAB leaders earlier had said such provisions are discriminatory as those are applicable only to the private commercial banks, not to the nationalised commercial banks or the foreign banks, operating in Bangladesh.