Six financial market regulators today will discuss how to stop ‘illegal’ banking activities of The Dhaka Mercantile Co-operative Bank Ltd which has no banking licence from Bangladesh Bank.
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.
Against the backdrop, top officials of six financial regulators — BB, Bangladesh Securities and Exchange Commission, Insurance Development and Regulatory Authority, Registrar of Joint Stock Companies and Firms, Microcredit Regulatory Authority and Department of Cooperatives — will discuss the issue at a quarterly coordination meeting at the central bank’s headquarters in the capital.
BB governor Fazle Kabir will preside 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 to the government. The issue is now under trial at the High Court, according to a BB report.
The institution collected maximum amount of deposits from the clients who were not its members, violating the act.
The DMCBL took the registration on 1973 from the Office of the Registrar of Co-operative Societies to operate as cooperative society under the Bengal Co-operative Societies Act, 1940.
The amended act (2013) imposed an embargo on the cooperative societies on using the word ‘bank’ with their names but the DMCBL continued using the word to attract clients.
A recent BB investigation found that the DMCBL ‘under the guise of’ cooperative was conducting ‘unabated and unregulated’ banking activities.
It warned that if the banking activities of the DMCBL were not stopped, a large number of depositors would face the risk of losing their money.
The DMCBL has been operating banking business across the country by opening 116 branches without following regulations issued by different financial regulators, the BB report said.
The DMCBL collected the deposits from more than 2.13 lakh clients with paying very high rate of interest than that of the scheduled banks, the BB report said.
The Department of Cooperatives has recently issued a show cause letter to the DMCBL seeking explanation why it (Department of Cooperatives) would not take action to liquidate the organisation.
The BB official said that the financial regulators would discuss at Monday’s coordination meeting how to stop the ‘illegal’ banking activities of the DMCBL.
The regulators will also discuss the licence cancellation process of Insurance Development Regulatory Authority.
The IDRA has recently cancelled the licence of Standard Insurance Ltd which is listed with the stock exchange.
The BB official said that the IDRA should have taken opinion from the BSEC before cancelling the licence of Standard Insurance as the general investors purchased a significant amount of shares of the insurance company.
Due to the IDRA move, the general investors have plunged into an uncertain situation, he said.
At the meeting, the two regulators — BSEC and IDRA — will discuss the process of cancellation of licence of any listed insurance company, he said.
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