Kazi Zahidul Hasan :
The government is going to hand over the private sector banks to powerful partymen and wealthy people to run them as ‘family business’, say economic analysts.
A parliamentary body on Wednesday recommended for passing the Banking Companies (Amendment) Act-2017 that allows the doubling of the number of directors in a bank’s board from a single family and extends the tenure of directors.
The Parliamentary Standing Committee on finance made the recommendation in a meeting after scrutiny of the proposed law.
The committee recommended passing the bill without any change and the bill is likely to be passed in the ongoing session of Parliament.
The analysts observed said if the Amended Act was passed, it would establish full control of a family to run a private bank,
The amendments, proposed by the Finance Ministry, were approved in a cabinet meeting earlier on May 8.
The Finance Ministry reportedly took the initiative to amend the law following pressure from a powerful quarter having affiliation with the ruling party.
Later, it sought opinion from the central bank that opposed the amendment proposals, saying the governance of the private banks will be affected if the law was amended, as the banks do business with a huge amount of money from depositors.
As per the proposed legislation, the tenure of bank directors would be extended to nine years from the current six years. They could become directors again after a three-year hiatus.
Besides, four members of a family would be able to become Directors of a Bank’s Board. The number is currently two.
Analysts and former central bankers also opposed the proposed law saying it would not only hurt the interest of depositors but also affect the smooth running of the private banks.
“The government is apparently going to handover private banks to a powerful quarter and wealthy families by passing the Banking Companies (Amendment) Act-2017,” Mirza Azizul Islam, a former adviser to the caretaker government, told The New Nation yesterday.
He added, “I don’t find any justification for the amendment because it will impair the good governance in the banking sector”.
“The government surrendered to the pressure exerted by the powerful quarter and brought changes in the Banking Company Act. Four directors in a bank from a single family and extended directorship tenure will turn the bank into a family venture,” he added.
Terming the government move ‘unethical,’ former Bangladesh Bank Governor Dr Salehuddin Ahmed said if passed it would be regarded as bad law for banking sector, as it would establish more control of owner families over the banks.
“The law will also chop some sort of regulatory power of the central bank,” he added.
Former BB Deputy Governor Dr Khondoker Ibrahim Khaled, said, “It will go against the interest of the depositors and it will establish family domination in banks.”
He said as banks are run with the depositors’ money, the sheer control of a single family is not desirable.
“The change in the law will yield bad results to the governance of banks when directors getting involved in irregularities, he said, adding, “The sector has already been gripped by bad governance.”
Dr Ibrahim Khaled observed that the owners of private banks give money to the government for various purposes, particularly for relief work, during natural calamities. “As a result, the owners of the banks have been able to exert pressure on the government to make the changes,” he added.
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.
