BSEC, IDRA lock in debate over Standard Insurance licence cancellation
Six financial market regulators on Monday took decision to expedite legal process against ‘illegal’ banking of Dhaka Mercantile Cooperative Bank Ltd as they were yet to take any effective measures against the organisation due to writ petitions filed by the DMCBL with the High Court.
The decision came from a coordination meeting of the six regulators – Bangladesh Bank, Bangladesh Securities and Exchange Commission, Insurance Development and Regulatory Authority, Registrar of Joint Stock Companies and Firms, Microcredit Regulatory Authority and Department of Cooperatives – at the central bank headquarters in the capital.
BB governor Fazle Kabir presided over the meeting.
A BB official told New Age on Sunday that the central bank and the Department of Cooperatives had earlier taken a number of initiatives to stop the ‘illegal’ banking activities of the DMCBL, but the organisation filed four writ petitions with the High Court against their moves.
The DMCBL filed a writ petition with the High Court in 2013 to use the word ‘Bank’ with its name, challenging the Co-operative Societies (Amendment) Act, 2013.
After the writ petition, the High Court issued a rule nisi on the government. The issue is now under trial at the High Court.
The institution collected huge amount of deposits from the clients who were not its members, violating the act.
A BB official, who attended at the meeting, told New Age on Monday that the regulators had requested Department of Cooperatives to speed up its legal process to vacate the writ petitions filed by the DMCBL.
Department of Cooperative is the regulator of the cooperative societies.
The Department of Cooperatives has already taken an initiative to liquidate the DMCBL which has collected more than Tk 981.05 crore from depositors and disbursed Tk 1,079.55 crore in loans violating rules.
The initiative, however, plunged in a futile situation due to the writ petitions filed by the DMCBL.
The BB official said that the high-ups of the BSEC had alleged at the meeting that the general investors of the capital market had recently faced a harmful situation as the IDRA had canceled the licence of the Standard Insurance Ltd, which is listed with the stock exchange, without informing it (BSEC).
‘The representatives of the IDRA protested the allegation saying that they were the concerned regulator of the insurance companies. So, IDRA is not obliged to inform the BSEC to cancel the licence of Standard Insurance Ltd’, he said.
The two regulators were engaged in a heated debate with each other on the issue and other regulators involved tried to calm the BSEC and IDRA.
In reply to a BSEC observation regarding the BB guidelines on external audit, BB officials at the meeting said that the rule of a tripartite meeting has been included in the guidelines with a view to strengthen banks’ provision-related inconsistency.
The Bangladesh Energy Regulatory Commission was invited at the coordination meeting, but any representatives of the entity did not attend it.
BERC was invited for better coordination with BSEC following the distribution margin cut of Titas Gas Transmission and Distribution Company by the entity without informing the capital market regulator resulting in sharp decline in TGTDCL shares.
BSEC commissioner Helal Uddin Nizami, MRA executive vice-chairman Amalendu Mukherjee and IDRA member Zuber Ahmed Khan, among others, were present at the meeting.
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