A proposed bank company amendment bill meant to ensure transparency and infuse dynamism in the country’s financial institutions is set to be passed when parliament resumes on Sunday.
The Bank Company (amendment) Bill-2013 will obligate the owners of bank companies to appoint three independent directors in bank management boards, in order to facilitate transparency. The bill will also bar directors of banks or bank companies from simultaneously holding similar posts in multiple financial institutions.
“The Bank Company Bill-2013 will be placed in parliament for adoption on Sunday,” Parliament Secretary Mahfuzur Rahman told the Dhaka Tribune on Saturday.
State Minister for Law Quamrul Islam tabled the amendment bill in parliament on April 22. It was then sent for scrutiny to the parliamentary standing committee on the finance ministry, which recommended the bill’s enactment.
Banking experts say the proposed amendments to the Bank Company Act-1991 would infuse dynamism into bank companies, as professionals would be appointed as independent directors to ensure the interests of clients and regulators.
Banks and bank companies will have to appoint independent directors within three years of the law’s passage.
The 1991 banking act had a provision for the optional appointment of independent directors. Development partners, including the International Monetary Fund, have been pressing the government to make the appointment of independent directors mandatory.
According to a proposed amendment to section 15 of the 1991 law, each of the bank companies would have a maximum of 20 directors, including three independent ones, who would be appointed by the board with the approval of the Securities and Exchange Commission.
The independent directors, the bill says, will in no way have any involvement or interest with the owners of the banks or bank companies; they will merely give their opinions in the interests of the financial institutions.
The bill further proposes that only two family members, including spouses, parents, children or siblings, will be eligible to hold directorial posts in a bank at the same time.
“The appointment of independent directors in the bank companies is very important for their smooth functioning and transparency in operation,” said Mamunur Rashid, who used to head Citibank, NA in Bangladesh.
The banker said the mandatory provision for the appointment of independent directors would work as a check-and-balance system in the companies.
The current parliament session began on June 3, and was adjourned with the passage of the 2013-14 national budget on June 30.
