Bank and Financial Institutions Division is going to amend three provisions of Bank Company Act for limiting time and space for the private bank’s board of directors, official sources said.
A source in the Banking Division said the amendment to the Bank Company Act will be finalised at an inter-ministerial meeting at the division.
The meeting will focus on a major change to provisions that will allow for four directors instead of existing two from a family.
The division will not amend 15(2) provision, according to the demand of the Bangladesh Association of Banks (BAB) under the Act as the shareholders of banks hold their posts for a lifetime as directors of bank, an official has said.
As per the proposed amendment, no director can continue for more than six years in two terms. One can become director again after taking a pause for one term.
According to the source, the division will discuss with the authorities concerned during the Monday’s meeting for relaxation of some provisions of the Banking Companies Act, especially the requirement to obtain approval from Bangladesh Bank for appointing directors.
Earlier, BAB also proposed amendment to the definition of family in the Bank Company Act, but the banking division wants that two family members stay on the board of director of private banks.
Under the act, family means spouse, parents, siblings, children and any person dependent on the sponsor director. Although the BAB says if any person is elderly and has separate business or fully independent, he/should should not be counted as family.
In August 2013, Bangladesh Bank ordered the commercial banks to abide by the amended Bank Company Act with the clause, restricting investment of commercial banks in the capital market by not more than 25% of their capital and reserve.
The last Bangladesh Bank order had also developed discipline in the bank.
The law, which was amended in 2003 after being designed in 1999, has fixed the number of directors at 20, of which four are autonomous directors from seven members, but that provision had not been okayed by the parliament as bill.