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Dhaka Tribune

Bank director tenure raised to 12 years

Through an amendment in 2018 the tenure of the bank directors was raised to 9 years from 6 years

Update : 22 Jun 2023, 05:18 PM

The Bank Company (amendment) Act 2023 was passed in parliament Wednesday, which saw the tenure of bank directors up from 9 years to 12 years.

The original bill, in line with recommendations of the International Monetary Fund (IMF) for availing its budget support, drew flak from experts for not reducing the tenure of the private-sector directors.

Through an amendment in 2018 the tenure of the bank directors was raised to 9 years from 6 years.

After the completion of this 12-year tenure a director will not be eligible to sit on the bank board for the next three years, the amendment added.

Another amendment proposal from him to section 19 of the Bill said that if a person or a group becomes defaulter unintentionally, the subsidiaries of the group or the related enterprises of the person will not be treated as defaulter.

According to the amendments, habitual loan defaulters will be barred from running businesses and from travelling abroad.

The amended law governing banks also has a provision which compels banks to publish their lists of willful defaulters on their websites and newspapers.

All the banks and non-banking financial institutions have to send the list of habitual defaulters to the central bank from time to time.

According to the amended law, an individual will be considered willful defaulter if he or she does not repay a loan taken in their name or their company's name despite having the means to pay it back.

In addition, any person will be treated as a habitual defaulter if s/he takes loans under the name of a non-existent company.

A borrower will also be defined as a willful defaulter if he or she transfers any asset kept as mortgaged in banks to get loans without prior approval from the bank concerned.

Banks will inform the Bangladesh Bank about willful defaulters and the central bank can issue a ban on their foreign travels, obtaining trade licence, and companies' registration with the joint stock and securities exchange commission.

The amendment stipulates that maximum three members of a family can serve on the bank board. 

Earlier, four members of a family could sit on a board.

The amended law also says that the bank directors and their family members must provide collaterals, bonds or securities for bank borrowing.

If habitual defaulters fail to repay the loans by then, banks will arrange an auction to sell off the mortgaged assets as per the Money Loan Court Act 2003.

In the proposed law, there is a provision for mergers and restructuring of banks.

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