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Bangladesh Bank empowered to formulate policy independently |
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March 29, 2000
Bankers in general have welcome the government decision to amend the Banking Company Act, 1991, to streamline the country's ailing banking sector.
The cabinet in its regular meeting held Monday approved the amendment to the Banking Company Act aiming to ensure the independent supervising authority of Bangladesh Bank to run the country's banking sector.
Earlier the Banking Reform Committee headed by Wahiduddin Mahmud recommended independent authority of the central bank in formulating the country's monetary policy.
The amendment, according to a source, seeks to empower the central bank to formulate the policy independently. Existing practice is that the central bank would have to seek the concurrence of the finance ministry to formulate any policy for the banking sector.
It was also said in the amendment that the governor and the deputy governor of the central bank should be appointed for four year terms and they would not be appointed for more than two terms.
The amendment also seeks to enforce the central bank's authority on the appointed of the managing directors (MDs) of the nationalized commercial bank (NCBs).
Obtaining the central bank's clearance would be mandatory while appointing the MDs for the NCBs. The finance ministry is now enjoying total authority in respect of the appointment of the MDs for the public sector banking.
Abdul Majid, managing director, Prime Bank Ltd, has welcome the government move to enforce the independent authority of the central bank to run the country's banking sector.
He said that four-year terms for the governor and the deputy governors will help the top executives of the central bank to draw policy on long term basis. It will also help them remain outside the influence of any quarter while performing their duties.
Amiruzzaman, managing director, Uttara Bank Ltd, also hailed the government move.
He said that the clearance of the central bank regarding the appointment of the MDs for the NCBs would help end abuse of the Banking Company Act. The existing practice is that the central bank's clearance regarding the appointment of the MDs for the private sector banks in mandatory.
He also suggested that tenure of the managing directors of commercial banks either public or private sector should also be fixed to streamline banking sector activities.
He said if any managing director is appointed for a fixed period he can draw the work plan. But in absence of that it was not possible on the part on any MD to draw a comprehensive plan to run the organization.
He suggested fixing the tenure of the managing directors of the banks either for minimum three years on maximum five years.
Another MD of a private bank opined that some provisions should be made to appoint such person or persons exposed to the central bank activities as governor or deputy governors of the central bank.
Source: The Financial Express
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