Parliament on Tuesday passed the ‘controversial’ Banking Companies Act-2018 without bringing any change to the proposed law.
The law will allow four members of the same family to sit on the board of a commercial bank and the directors to hold their posts for nine years consecutively.
Finance Minister Abul Maal Abdul Muhith placed the bill before the House seeking its immediate passage.
The House, with Speaker Shirin Sharmin Chaudhury in the chair, passed the bill by a voice vote rejecting all the amendment motions put forwarded by the opposition lawmakers.
Main opposition Jatiya Party lawmakers staged a walkout from the House protesting the passage of the law which they said was made to protect the interests of some individuals, not the mass people.
The cabinet on May 8 approved the amendments to a law allowing four members of the same family to sit on the board of a commercial bank.
Economists and noted bankers opposed the proposed law saying it would hurt the interest of depositors.
They said the government brought the amendments for the benefit of the businessmen.
Former Bangladesh Bank Deputy Governor Khandker Mohammad Ibrahim Khaled the told daily sun that the move has been a bad precedence.
“It will be considered as a backtracked instance in the history of country’s banking sector,” he said.
He said it would turn the banks into family concerns as general shareholders and clients have been strongly condemning the decision.
He also said bank employees have also been expressing their grave concern on the issue.
“Once, some 22 families used to control banking sector in Pakistan. Now few families in Bangladesh will capture the banking sector,” he said.
“Despite protests from various quarters, the government has passed the law to benefit some directors of banks,” he added.
Former Bangladesh Bank governor Salehuddin Ahmed told daily sun that the directors have to serve the interest of the depositors of the bank instead of taking personal gains.
“The central bank should increase its vigil on the operations of banks using potential norms of the bank company act to establish good governance in the banking sector,” he said.
The proposed law mentions that four members of a family instead of existing two can be inducted on the board of directors of a bank at a time.
A director may be re-appointed for another three-consecutive term after a three-year break as there is no obstacle in the law to hold the post after a break.
The existing law allows commercial bank directors to hold the office for six years—two consecutive three-year terms.
The same individual becomes eligible to hold the post for another three-year term with a three-year break.
“The amendment entails that a director of any bank will not be able to remain in office after nine years. The individual may again hold the post after a three-year break,” said the law.
The parliamentary standing committee on finance ministry earlier in a meeting in October postponed discussion on Banking Companies Act due to the absence of Finance Minister AMA Muhith.
Abdur Razzaque at that time told reporters that the standing committee wanted to know from the finance minister about the reasons for doubling the number of directors in a board of the bank from a single family and extending the tenure of shareholder directors as civil society and banking related persons have been speaking against it.
Talking to reporters after scrutinising the bill, the committee chairman said, “Although I had some reservation regarding the bill, the committee unanimously recommended for the passage of the bill without bringing any change.”
Asked for not running an elaborate discussion on the bill, especially on the controversial provision of doubling the number of directors and extending the tenure of directors, Razzaque said the committee members didn’t oppose any provision of the bill.
The Banking Companies Act was last amended in 2013 regarding share-holding directors’ tenure and how many of a family could become directors.
The 2013 amendments were in line with the advice of the International Monetary Fund and followed international best practices. It came against the backdrop of directors getting involved in irregularities.
Taking the floor, JP lawmaker Fakhrul Islam said good sense should prevail in the finance minister.
Asking the minister to withdraw the bill, Imam said none should claim the bank as a personal asset.
“If the law is formulated for the interest of the directors, 90 percent stakeholders will be deprived. The nation will be benefited if the bill is withdrawn,” he said.
Opposition Chief Whip Nurul Islam Omar said the banking sector is on the verge of destruction.
“Now people are afraid of depositing money at banks. The bill has been brought to destroy the sector,” he said, urging the minister to withdraw the bill.
Rawshan Ara Mannan said that law has been amended to go by the pressure of the investors.
“The people are in a grave concern over the banking sector,” she said.
Independent lawmaker Rustam Ali Farazi asked the government to send back the bill again to the concerned standing committee and take further opinions from people.
“The move has been made us astonished as the bill has been amended for the fifth time for personal interest,” he said.
The lawmaker alleged that the bank directors do not want development of the banking sector.
“The law should not be amended for some looters, who siphoned off the money abroad,’ he said.