The Bangladesh Bank will now be able to initiate forced mergers of any bank if its board of directors and management were found to be involved in activities that went against depositors' interest.
The banking regulator has been vested with the power in the newly amended Bank Company Act 2023, according to a gazette notification published by the central bank on Monday.
In the amended act, the central bank has also been empowered to reconstruct the board of state-owned banks and inspect bank transactions of public organizations.
Any subsidiaries and other organizations formed with bank money have been brought under the direct control and monitoring power of Bangladesh Bank, according to the gazette.
The amended Bank Company Act states that the central bank will be able to take multiple measures to consolidate or reorganize any banking company if the regulator finds that the banking company failed to implement the recovery action plan.
The central bank can also take similar measures if the chairman, director, chief executive or senior management officer of a banking company is found to be involved in activities deemed harmful to the organization or its depositors.
Before this, the regulator could facilitate a merger only for the willing banks.
Meanwhile, in the amended Bank Company Act, the Bangladesh Bank has been given special powers to collect bank information of any government agencies or any employees working under other regulatory bodies.
Moreover, the amendments also brought bank subsidiaries under the direct control of the Bangladesh Bank.
Such subsidiaries are currently regulated by the Bangladesh Securities and Exchange Commission (BSEC).
Bangladesh Bank may at any time -- by one or more of its officers -- inspect the documents and accounts of any branches and subsidiaries of a bank-company located inside or outside Bangladesh bank-company registered in Bangladesh, the amended act stated.
Meanwhile, for bank-company registered outside Bangladesh, the central bank will be able to inspect the books and accounts of all its branches located in Bangladesh.
