Nazmul Ahsan
The representative bodies of the owners and chief executive officers (CEOs) of all banks have opposed a number of provisions including the new directorship criteria and stringent capital requirement incorporated in the proposed Bank Company (Amendment) Act, 2012.

The country has a total of 47 scheduled banks with more than 750 directors and chairmen on the boards of those banks altogether.

Bangladesh Association of Banks (BAB) and Association of Bankers Bangladesh (ABB), after being asked by the central bank, have submitted their separate proposals on the proposed amendment to BCA, 2012 to Bangladesh Bank (BB) recently, a top source in the BB said.

The BAB termed the proposal to fix the maximum number of bank directors at 13 'arbitrary', calling upon the central bankers and policy makers to scrap it.

'Bangladesh Bank proposes to restrict the size of the Board to 13 directors only, which is arbitrary. The BAB is of the view that the proposed amendment will not be in the best interest of the economy and the country and hence, the proposed section is rejected," reads the opinion of the BAB.

The BAB also opposed the proposed restriction on tenure of a bank director to three years only and urged the BB to reconsider the new provision in the best interest of banking sector.

According to the proposed amendment, the maximum tenure of a bank director will be three years. The provision, however, will not be applicable to the managing directors of banks, who are also ex-officio bank directors.

The current provision under the BCA, 1991 allows bank directors to serve up to six years in two consecutive terms.

The BAB, however, did not mention anything about the proposal to scrap the current provision of multiple directorship of bank directors in other financial institutions

According to the proposed BCA, 2012 (amendment) Bill, a bank director will be ineligible to become a director of a non-banking financial institution or an insurance company simultaneously. The clause 23(1) of BCA, 1991, which is in force now, has allowed a bank director to become directors in other two areas -- non-banking financial institutions and insurance companies.

Furthermore, the BAB in its proposal said the new BCA, 2012 should include comprehensive guidelines on islami/shariah banking system.

On the other hand, the ABB in its proposal said stringent provision incorporated in the BCA, 2012(amendment) Bill for failing to maintain adequate capital by a bank should be softened.

According to the proposed BCA, 2012, a banking company, failing to ensure minimum capital adequacy with in the stipulated time, will be barred from collecting bank deposits.

The ABB in its proposal on the specific provision said, "the BB may impose some restrictions of lending instead of taking away lending power".

It has proposed to extend the timeframe from two years to three years for doing banking business in case of continuous non-compliance by defaulting banks in meeting criteria in ensuring minimum capital.

It has also urged BB to keep the advance-deposit (AD) ratio limited to 80 per cent instead of fixing the same ratio time to time by the BB.

Top bankers in the BB, responding to proposals of ABB and BAB, said a few proposals of ABB is realistic, while none of the proposals from BAB is implementable.

"We have sent our specific opinion on the proposals of ABB and BAB to the Ministry of Finance (MoF), which is now busy fine-tuning the BCA (Amendment), 2012 with the help of a committee, formed for the sole purpose of updating the BCA," an executive director of BB told the FE Sunday.