The government on Monday approved the amendments to a law allowing four members of the same family to sit on the board of a commercial bank.

The amended law will also allow the directors of commercial banks to serve for three consecutive terms of three years each.

The seal of approval was given to the Bank Company (Amendment) Act 2017 at the regular weekly cabinet meeting with Prime Minister Sheikh Hasina in the chair.

Former adviser to a caretaker government Dr AB Mirza Azizul Islam said the provisions in the law would have a negative impact on the banking sector.

“This will go against the good governance in the banking sector,” he told the daily sun, adding that the government might have taken the move in the face of pressure from business people.

Former Bangladesh Bank deputy governor Khandker Mohammad Ibrahim Khaled told daily sun that the law would turn the banks into family concerns.

“If the same person holds a position for nine long years, it might make the person develop a strong personal interest in the bank. It will be harmful to the banking sector,” he said.

Emerging from the cabinet meeting, Cabinet Secretary Shafiul Alam told reporters that the amended law would allow a director to hold the office for three consecutive three-year terms.

He said the amendment also proposed that four members of a family instead of existing two can be inducted in the board of directors of a bank at a time.

“A director may be re-appointed for another three-consecutive term after a three-year break,” the cabinet secretary said, adding that there is no obstacle in the law to hold the post after a break.

He said the existing law allows commercial bank directors to hold the office for six years—two consecutive three-year terms.

The same individual becomes eligible to hold the post for another three-year term with a three-year break.

“The amendment entails that a director of any bank will not be able to remain in office after nine years. The individual may again hold the post after a three-year break,”

Alam said. Responding to a question regarding four directors from the same family, he claimed that the impacts could be both positive and negative.

“If the people with good intentions handle the banks, it will be good,” he said.

Responding to another question whether the new provisions would encourage irregularities, the cabinet secretary said, ‘Let’s see what happens in future.”    

He also said it was the demand of the owners to amend the law to enhance the opportunities for directors.

“As the same family makes the investment, they have a passion for it. The owners argued that those who invest in a bank at the beginning as directors loose their position after some years. So they demanded the role of founding directors,” he said.

The amended law also made the approval from the central bank mandatory to the nominations of the director, managing director or chief executive officer (CEO) of commercial banks.

news:daily sun/9-may-2017