Bangladesh's finance ministry proposed changes to the law governing private banks, including raising the number of years the board of directors can serve for such banks, The Daily Star reported Aug. 7.
The proposed amendment will increase the terms of each board member to nine years from the current six years. The ministry is also proposing allowing four members of a family to serve as directors of a bank, instead of the two family members currently allowed.
Under current laws, a director can only serve for two terms, with one term consisting of three years. Finance Minister AMA Muhith said the amendment will allow new banks to operate properly and bring dynamism to the sector.
The ministry is also proposing to redefine what family means to allow more members to join a bank's board. At present, a director's spouse, parents, children and any dependent are classified as family. The finance minister is proposing changing who can be termed as dependent, particularly if the person operates a separate business and is a taxpayer.
Experts have criticized the proposal, saying it could negatively impact the banking sector. Salehuddin Ahmed, a former governor of the Bangladesh Bank, said the planned move could be detrimental to efforts to establish good governance in the banking sector. The government should have included more independent directors and shareholders on a bank's board, he added.