To restore good governance in the banking sector the tenure of bank board members from the same family in a bank should be limited to a maximum of six years, with only one member allowed per family, said the Centre for Policy Dialogue (CPD).
"Bank board membership from a single family should be limited to one individual, with a maximum tenure of six years over two terms," CPD Executive Director Fahmida Khatun said speaking at a press briefing titled "Restoring Good Governance in the Banking Sector" on Monday (12 August).
She noted that in 2018, the Bank Company Act was amended to increase the number of family members allowed on a bank’s board from two to four, with a tenure extension to nine years.
This was subsequently revised in 2023 to three members with a tenure of twelve years. Khatun described this as a recipe for chaos, advocating instead for one director per family with a maximum of two three-year terms.
She further stressed the importance of maintaining the operational independence of the Bangladesh Bank, which, despite being empowered to act independently, has failed to exercise its authority effectively.
Addressing the issue of politically motivated bank licensing, Dr Fahmida Khatun highlighted that nine new banks were licensed in 2013, all with political affiliations.
She questioned whether the licensing of banks, television stations, and universities was conducted with proper evaluation. Khatun urged that no new banking licenses be issued without a thorough assessment of their economic viability.
The economist also highlighted the significant capital injections made to banks between 2009 and 2017, totalling Tk15,705 crore, and called for an end to such practices.
She advocated for a robust exit policy to allow struggling banks to withdraw from the market without jeopardising customer funds.
In closing, she urged action against deliberate loan defaulters, recommending the suspension of their access to various card services.
Dr Fahmida Khatun suggested sharing information about these defaulters with networks such as MasterCard, Visa, and SWIFT, to prevent the use of their cards abroad.
