The High Court has stressed the need for preventing financial scams in the banking sector.
In the full text of a verdict, it said some sensational financial scams involving a few banks have surfaced recently.
“It is appreciable that specific measures have been taken by the government organisations, including Bangladesh Bank, and that the Anti-Corruption Commission are investigating the scams. But we have to think and analyse [information] on the scams to prevent such crimes in the future,” the HC said in the text, which has been released recently.
Putting emphasis on the modernisation of banking policies, the court also observed that bank managements, including the board of directors, must be transparent and accountable to the Bangladesh Bank to have a sustainable economy.
“It is to be kept in mind that all the banks are doing business with the depositors’ money i.e. public money and so their management, including Board of Directors, must be transparent and accountable to the regulatory body,” it said.
The HC bench of Justice JBM Hassan and Justice Md Khairul Alam delivered the verdict on November 3 last year following a writ petition filed by Human Rights and Peace for Bangladesh in February that year.
In the petition, the HRPB challenged the failure and inaction of the authorities concerned in stopping various irregularities and corruption in sanctioning loans and offering waiver of interest payments against bank loans in the last 20 years.
In the full text of the verdict, the HC said the BB, as a regulatory body, should not brush aside suggestions given by economists and former bankers and recommendations in reports of the International Monetary Fund and the World Bank.
It also directed the BB to constitute a nine-member committee, comprising banking experts, in 90 days of receiving the judgement. The committee will identify the loopholes in sanctioning loans.
“The committee will also prepare guidelines/suggestions regarding prudential banking, management, risk management and internal control. The Bangladesh Bank shall take support from the instructions and recommendations to be made by the aforementioned nine-member committee,” it said.
The HC directed the board of directors of all banks to take clearance/approval from the BB while promoting and or recruiting and removing top five officials in their respective institutions.
During a hearing on the petition in May last year, HRPB lawyer Manzill Murshid also challenged the legality of a circular issued by BB’s Banking Regulation and Policy Department (BRPD) on May 16.
In the circular, the BB said defaulters would be allowed to reschedule their classified loans by making a down payment of only 2 percent instead of the existing 10-50 percent.
The HC bench upheld the circular.
“In granting new loan after rescheduling under clause 2 [U] of the present circular No.5, the bank company shall follow the clause 6 of the BRPD Circular No.15 dated 23.09.2012,” it said.
It means that the loan defaulters must make a down payment of 15 percent of the outstanding amount to get fresh loans from any scheduled bank in line with the circular, Manzill Murshid told The Daily Star.