The Parliament on Sunday amended the bank-company act-1991 adopting provisions for the appointment of independent directors in banks and bank-company units for ensuring check-and-balance in its operations.
At present, operations in the banks are largely dominated by the owners.
The House enacted the Bank-Company (amendment) Bill-2013 through voice vote, rejecting opposition’s demand for the resignation of Finance Minister AMA Muhith for his “failure” in stopping swindling of money from the capital market and the state-owned banks.
Taking part in Monday’s session, the opposition lawmakers claimed that the bill was passed only to legalise the amount of money “looted” from the banks by the present government.
Reacted sharply to opposition’s claim, Muhith said: “Looting and misappropriation are the features of BNP.”
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.
Banking experts say the 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 the 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.
