Lifetime tenure of private bank directors eroding good governance: A.K. Azad

The lifetime tenure of directors on the boards of private banks is eroding good governance in the country’s banking sector, said A.K. Azad, Vice President of the International Chamber of Commerce (ICC) Bangladesh.

Speaking at an MTB-FE roundtable discussion titled ‘Banking Sector Reforms’, organised by The Financial Express (FE) at Six Seasons Hotel in Dhaka on Thursday, the former president of the FBCCI said bank directors are custodians of public deposits and should not remain in their positions indefinitely.

“Why should a director remain in office for more than three years?” he questioned.

Referring to long-standing discussions on the formation of a banking commission, Azad urged the finance adviser to place the proposal before the cabinet before the current government’s tenure ends.

“We hear the proposal is with you, but it is not being forwarded. At least we would be reassured that reform initiatives were taken,” he said.

Azad also stressed that without strengthening the regulatory authority and capacity of Bangladesh Bank, the banking sector would not recover. He noted that even the limited autonomy once enjoyed by the central bank has now become fragile.

The crisis in the banking sector is not confined to state-owned banks alone, he said, citing the condition of private banks such as National Bank and Exim Bank. “Mergers are being carried out, but they will not solve the problem,” he added.

Azad acknowledged that the current governor and finance adviser have pulled the economy back from the brink over the past one and a half years, but urged them to complete key banking sector reforms before leaving office.

Mutual Trust Bank PLC was the title sponsor of the roundtable, while BRAC Bank PLC and NCC Bank PLC were gold sponsors. Trust Bank PLC, Shahjalal Islami Bank PLC, Eastern Bank PLC, and Mercantile Bank PLC were co-sponsors.