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Bank directors’ tenure likely to be raised

  • Published at 11:35 pm May 7th, 2017
  • Last updated at 10:06 am May 8th, 2017
Bank directors’ tenure likely to be raised
The government is going to amend the Bank Company Act increasing the tenure of directors of private commercial banks to nine years divided in three terms. Besides, the private bank board can also have four members from an owner family as directors as per the amendment proposal. Financial Institutions Division will place a proposal on the matter at the Cabinet Committee meeting presided over by Prime Minister Sheikh Hasina today. The people concerned think it is good for banking sector as there is no law regarding appointment of directors in private banks. Last year Finance Minister AMA Muhith hinted that the tenure of directors at private commercial banks might be extended up to nine years from existing six years. According to amendment of the provision 15 (10) Bank Company Act 2017, four family members of owner family will be directors instead of existing two directors whatever written in the company law. The directors of a private bank now hold the post two terms and each term is three years. Now it will be nine years in three terms and each tenure will be three years. Former Bangladesh Bank Governor Salahuddin Ahmed said it is bad law for banking sector as owner family will have more controls over the banks. According to the previous law approved in 2013, the banks must take approval from the central bank for the appointment of the directors. Bank owners platform, Bangladesh Association of Banks (BAB) official said the law regarding the six-year tenure of a director may be applicable to the directors coming from outside, like independent directors, appointed directors or ex-officious directors. The sponsor-directors will be deprived of their right to wealth or property if the law is applied for them as well, the association said. ~ Since the sponsors have invested their money to make up the paid-up capital of the bank, it would not be judicious to deprive them of their position and wealth simultaneously, BAB said. The BAB also proposed amendments to the definition of family in the law. Under the act, family means spouse, parents, siblings, children and any person dependent on the sponsor director. But the BAB says if the person is elderly and fully independent or has separate business, he/she should not be counted as family.