The finance ministry in a move has decided to incorporate a new provision in the proposed bank company act which will empower Bangladesh Bank to remove managing directors of the state-owned banks, said officials.
Currently, the ministry exercises both the responsibilities of appointing and removing MDs of the state-owned commercial and specialised banks.
The Banking Division of the finance ministry was compelled to include such provision in the wake of Tk 3,700 crore embezzlement by little-known Hall-Mark Group from a branch of state-owned Sonali Bank last year.
It has been revealed that high officials of the bank were involved in the scandal.
Finance minister Abul Maal Abdul Muhith last week said the government would empower the central bank through the new bank company act by increasing its monitoring capacity over the state-owned banks.
The Banking Division, however, dropped a recommendation of the BB to give it authority of scarping the board of directors of the state-owned banks.
The BB had made the recommendation as many directors, appointed by the present government on political consideration in the state-owned banks, have no idea of banking and its operation.
As the central bank has no authority to dismantle the board of directors of a state-owned bank, it urged the finance ministry to reconstitute the Sonali Bank’s board after the fund embezzlement.
The government is amending the bank company act because of a condition by International Monetary Fund.
The government needs the amendment to get the second tranche of the IMF loan worth $130 million.
The proposed amendment to the act, which will be placed before the
cabinet for approval, will allow a bank to invest maximum 40 per cent of its paid-up capital in the share market for three years only.
By the end of the three years the bank will have to reduce its stock market investment to 25 per cent.