Bank Company (Amendment) Bill 2023 passed with provision of 12 years tenure for directors

The Bank Company (Amendment) Bill 2023 was passed in Parliament on Wednesday with the provision to allow the directors to remain in their position for 12 years consecutively.

According to the present law, the tenure of the directors is nine years.

Finance Minister AHM Mustafa Kamal moved the bill and it was passed by voice vote.

The bill mentioned that after completing 12 years in the position of director, one can not return to the same post before three years.
Opposition Jatiya Party MPs staged a walkout, protesting inclusion of this provision.

Some 15 MPs from the opposition party joined the walkout, Jatiya Party Secretary General Mujibul Huq told reporters after the walkout.

The opposition MPs also protested against the way of inclusion of the provision which was not included in the original Bill. It was later inducted in an amended proposal by ruling party MP elected from Tangail Ahsanul Huq (Titu).

Currently, there can be four directors from one family, but this has now been reduced to a maximum of three.

As per the proposed provisions, the banks must send the list of willful loan defaulters to Bangladesh Bank (BB) and it can impose a ban on overseas travel against them.

Stricter measures are also related to the issuance of their trade licence, and company registration under the Bangladesh Securities and Exchange Commission and the Registrar of Joint Stock Company and Firm.

A willful defaulter cannot be eligible to be a director of a bank or financial institution until after five years have passed after being excluded from the list of willful loan defaulters.

If any director of a bank becomes a willful loan defaulter, Bangladesh Bank can declare his post vacant.

If a bank fails to send the list of loan defaulters to the central bank in time, the bank can be fined Tk50 lakh to Tk1crore.

The bank will have to count fines of an additional Tk1 lakh for each day's delay.

According to the draft law, despite having the financial ability, if a person or institution fails to repay a loan, it will be considered willful default.

About the definition of a wilful defaulter: "If anyone takes financial benefits from a bank or financial institution providing false information in their name or of their family members, the individual will be considered a willful defaulter."

At the same time, if someone states a specific purpose for taking a loan from a bank or financial institution, but uses the loan for other reasons, the recipient will be considered a willful defaulter.

A provision is also included here so that Bangladesh Bank can regularly inspect different institutions and foundations run under the law.

According to a provision in the proposed bill, any sister concern or individual of any  group is not a wilful defaulter if it is authenticated by Bangladesh bank and if there are logical ground for defaulting the loan by individual or entity or company then the mentioned person/ entity or company won't be a defaulter.

These type of entities, individuals or company which the case may be will be eligible for granting further/ fresh loans subject to Bangladesh Bank permission and complying the instructions thereon.

Several MPs of the Jatiya Party reacted strongly to the proposal of extending the directorship up to 12 years. Participating in the discussion of passing the bill, they raised the question whether the bill can be amended or not. They demanded an explanation from the speaker.

Jatiya Party MP Fakhrul Imam said that a member of the government party proposed an amendment to make the term of the directorship for 12 years.

Pir Fazlur Rahman said that the government has brought this amendment to keep their favourite directors in the posts. "But the process is not right," he said.

Finance Minister AHM Mustafa Kamal while responding said that the bad debt has come down from 13.2 percent to 8.6 percent in the last 14 years.

"Branches of government banks have doubled. Bank deposits increased 7 times. Year-on-year profit increased 8 times."

When Ahsanul Islam, the member of parliament of the government party, went to raise his amendment proposal, the members of the opposition party raised an uproar.