Bank Company Act - 1991: ATM Tahmiduzzaman, FCS EVP & Company Secretary

BANK COMPANY ACT - 1991
ATM Tahmiduzzaman, FCS

EVP & Company Secretary
United Commercial Bank

Bank Company Act
2
1991: Enactment of the ACT

1993: First Amendment
1995: Second Amendment
1997: Third Amendment
2003: Forth Amendment
2007: Fifth Amendment
2013: Sixth Amendment
2018: Final Amendment

As per the new amendment, four members of a family instead of existing two can be inducted in the
board of directors of a bank at a time, and a person can hold the post of a director of a bank for
nine years continuously instead of current three years.
United Commercial Bank Limited October 6, 2019

Bank Company Segmentation
3
Non-Scheduled
bank
State Owned Bank Conventional Bank
Bank Company Private Bank

Scheduled Bank Sharia Based Bank
Foreign Bank
Specialized Bank
Cooperative bank

Definitions
4
1. Secured loan or advance refers- 5(umo)

a. Made on the security of an asset’s market value
b. Which is not less than the amount of such loan
2. Borrower means a person- 5(cha)

a) Who has applied, met specific requirements, and received
a monetary loan
b) Legally responsible for repayment of the loan
c) Subject to face penalties for not repaying
3. Creditor" means- 5(jha)

a) Can be any person, company or organization
b) accepting deposits of money on the basis of shared win and loss
c) Granting financial opportunities

Continued…..
5
5. Default Debtor- 5(ga) (ga)
a) Failed to pay back the loan/advance/interest
b) Expired 6 (six) months as per the definition proclaimed by

Bangladesh Bank.

Key Businesses of Bank Company
6
Section -7
 Borrowing Or Raising Money

 Lending Of Money
 Collecting Deposits
 Bill Of Exchange And Bill Of Lading
 Issuing LC, Cheque, Promissory Notes
Section -7
 Foreign Exchange
 Guarantee, Indemnity And Safety Locker

Prohibition on Banking Business
7
 Directly or indirectly deals in the

buying and selling of goods
Section -9
 Bartering of goods
 Holding immovable property except

such as is required for its own use

General Limitation for loan margin
8
Section -26 Kha
 The amount of loans shall not be more than

certain percentage of reserve capital as fixed by
BB
 The percentage shall not be more than 25 % on
the any circumstances
 The total amount of large loan shall not be more
than certain percentage of total loan as fixed by
BB

Transaction with Bank Related Person
9
Section 26 (ga)
The person related to bank’ means -
The Director, Managing Director or CEO or their family members
 Bank related person should not get easier facilities compared

to Non-bank related
 The loan facilities of such person should not more than 10%
the capital tier-1
 BoD approval is required except exempted minimum amount
 If knowing fully any contravention made, BOD will be responsible
 Rules circulated by BB will be applied for such loan and transaction
 No loan shall be provided to the employees deviating BB’s direction time
to time

Restrictions on loans and advances
10
Section 27
 Restriction on any loans on its own shares

 Restriction on any loan to directors or their families or
guarantors without security
 Need majority approval for directors loan
Need to report BB monthly regarding such loan
 BB has full authority to take actions if something goes wrong

Restriction on Debtor Company
11
Section 27 (ka)
Bank’s Consent Required-

a) Directors’ Resignation
b) Directors’ Retirement
c) Directors’ Removal
d) Share Transfer by Gift
e) Share Transfer by sell

Actions regarding List of default Borrower
12
Section -27 (ka) (ka)
 Bank shall Send list of defaulted borrowers to the BB
 BB shall send the list to all bank companies
 No bank company shall provide any credit facility to any
default borrower
 Bank shall file suit against the defaulted borrower
according to law in force

Remission of Debts
13
Section -28
No remission without prior approval of BB of following:
a) Director & their family member
b) Director Related Concerns
c) Director Related Person

Opening Branch
14
Section -32
 BB’s permission required:
a) Open new business place
b) Change of existing location
c) Open business outside the country
d) Change of location outside the country
e) Exemption for temporary service not longer than
one month but inform central bank within a week

Unclaimed Deposit
15
Section -35
To be handed over to Central Bank subject to-

a) Persons other than government, minor, court
b) 10 years unclaimed
c) 10 years no communication
d) 10 years from payable date
e) 10 years from issuance date
f) 3 months notice to the owner
g) Interest to be handed over
h) List of such unclaimed deposits in website for one
year

Punishment for certain activities
16
Section -57
 No obstructions on lawful entrance or leaving the place

 No obstructions on carrying business
 Restriction on holding violent demonstration
 Restriction on any activities which prevents or hamper
transaction
 Restriction on activities that bring lack of confidence of the
borrower
Punishment
Two years imprisonment or fine up to two lac or both

Nominee for Payment
17
Section 103-108
 Depositor should nominee one or more person
 Nominee will get the payment after death of depositor
 Incase of multi depositors and multi signatories, nominee
along with live depositor jointly withdraw the money
 Incase of nominee, succession certificate will be in
effective
 Any notice for claim from persons other than nominee is
ineffective
 Same conditions will be applicable for the Articles kept in
safe custody
 Same conditions will be applicable for the articles kept in
safety lockers
 Incase of lockers, a check list should be signed by the
nominees
Public Servant
18
Section 110
Following persons are being treated as public servant as

defined in panel code 1860 section 21
 Chairman
 Director
 Auditor
 Liquidator
 Manager
 Officer and Employees

Power to make rules or exemptions
19
Section 120-121
 BB may issue rules through official gazette notification
 BB may exempt from any of the provision for time being

Power to make rules or exemptions
20
Section 120-121
 BB may issue rules through official gazette notification
 BB may exempt from any of the provision for time being

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BANK COMPANY ACT - 1991

ATM Tahmiduzzaman, FCS

United Commercial Bank

1991: Enactment of the ACT

2018: Final Amendment

United Commercial Bank Limited October 6, 2019

Bank Company Private Bank

United Commercial Bank Limited October 6, 2019

1. Secured loan or advance refers- 5(umo)

2. Borrower means a person- 5(cha)

3. Creditor" means- 5(jha)

United Commercial Bank Limited October 6, 2019

5. Default Debtor- 5(ga) (ga)

a) Failed to pay back the loan/advance/interest

b) Expired 6 (six) months as per the definition proclaimed by

United Commercial Bank Limited October 6, 2019

 Borrowing Or Raising Money

United Commercial Bank Limited October 6, 2019

 Directly or indirectly deals in the

 Holding immovable property except

United Commercial Bank Limited October 6, 2019

Section -26 Kha

 The amount of loans shall not be more than

United Commercial Bank Limited October 6, 2019

 Bank related person should not get easier facilities compared

United Commercial Bank Limited October 6, 2019

 Restriction on any loans on its own shares

United Commercial Bank Limited October 6, 2019

Bank’s Consent Required-

United Commercial Bank Limited October 6, 2019

Section -27 (ka) (ka)

 Bank shall Send list of defaulted borrowers to the BB

 BB shall send the list to all bank companies

 No bank company shall provide any credit facility to any

 Bank shall file suit against the defaulted borrower

according to law in force

United Commercial Bank Limited October 6, 2019

No remission without prior approval of BB of following:

a) Director & their family member

b) Director Related Concerns

c) Director Related Person

United Commercial Bank Limited October 6, 2019

 BB’s permission required:

a) Open new business place

b) Change of existing location

c) Open business outside the country

d) Change of location outside the country

e) Exemption for temporary service not longer than

one month but inform central bank within a week

To be handed over to Central Bank subject to-

United Commercial Bank Limited October 6, 2019

 No obstructions on lawful entrance or leaving the place

United Commercial Bank Limited October 6, 2019

Following persons are being treated as public servant as

United Commercial Bank Limited October 6, 2019

 BB may issue rules through official gazette notification

 BB may exempt from any of the provision for time being

United Commercial Bank Limited October 6, 2019