Bangladesh Bank on Wednesday informed scheduled banks that they could now implement the amended bank company act that allowed appointment of four members of a family to the board of directors of a bank and extension of the tenure of a director up to nine years.
In a circular, the central bank’s Banking Regulation and Policy Department also advised the banks to place the Bank Company Act (Amendment) 2018 before the next board meeting to make its members informed.
The amendment came into force on January 28 when an official gazette notification was issued after the parliament on January 16 passed the changes to the law allowing tightening of family grip over the board of a bank.
The amendment has allowed four members of a family to the board and extended the tenure of a director up to nine years. Previously, only two members of a family could become directors of a bank and the tenure of a director was six years.
The changes have drawn severe criticism from experts, economists and civil society members as they feared the changes would further deteriorate the already bad situation in banking sector of the country.
A Chittagong-based group has recently taken control of a number of banks while many other banks could not come out of different family influences causing irregularities in loan disbursement and hampering good governance.
Officials of the central bank said that the scheduled banks would now be able to implement the new provisions of the act.
Private bank owners had been pursuing the government for bringing the changes so that a family could ensure full control of the board of a bank and hold the post of director for three consecutive terms or nine years.
Many directors are now heading towards the end of their six-year tenure.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Banking