The Central Bank has taken a strict stance to prevent bank takeover by bank entrepreneurs by anonymous share purchase or holding. To this end, the Central Bank has formulated a policy. According to the policy, regardless of the name of the person or institution in which the shares were purchased or held, the shareholder must provide information about the actual owner of the shares.
The actual owner of the shares will be considered the main beneficiary of the shares. Information about the share holders and actual owners will have to be sent to the Central Bank every three months from now on. The Central Bank will build a database with this information. In light of which the beneficiary of the shares can be identified in case of emergency.
A circular in this regard was issued by the Central Bank on Sunday night and sent to the chief executives of commercial banks. This policy will be effective from the March quarter of next year.
Sources said that during the tenure of the last Awami League government, nine commercial banks were taken over by buying shares anonymously in the name of S Alam Group and looting them in an unprecedented manner. These banks have become weak due to looting. As a result, they are now unable to return the deposit money of customers. The central bank has taken this step to prevent bank takeover or fraud by buying shares anonymously.
The policy states that according to the Bank Company Act, no single person, family or interested institution or group can hold more than 10 percent of the shares of any bank. To become a director of a bank, at least 2 percent of the shares must be held by a single person. Information about the actual beneficial owner of more than 2 percent of the shares of a bank in the name of a single person must be sent to the central bank. This information must be sent to the central bank every three months. The central bank will create a database with this information. If significant shares are held in the name of different institutions, information must also be provided about that. The names of the beneficiaries, including the main owners of those institutions, must be given.
The policy states that from now on, the actual owner of the individual, family or institution holding 2 percent or more shares in any way will be considered the actual beneficial owner. Beneficiaries of 2 percent or more shares in the name of different individuals and institutions will also be included in this category. Bangladesh Bank can order the presentation of appropriate information of direct and indirect shareholders to make the declared shareholding structure transparent or consistent with reality. If it finds any inconsistency, it can also order changes in the legal system and ownership structure.
The policy says that in that light, the central bank will create a ‘UBO database’ about the actual ownership of the shares. However, if there is a change in ownership in a marginal ongoing situation, that information must be reported immediately. If someone provides false information, Bangladesh Bank can confiscate their shares in favor of the state in light of the Bank Company Act. Bangladesh Bank has been asked to present this policy in detail at the next meeting of the board of directors of each bank.
According to the policy, if an individual or institution buys shares by making a false declaration or becomes a director of the bank with those shares, the central bank can confiscate those shares in favor of the state.
It says that if there is opacity in the ownership structure of a bank, it creates problems in assessing the actual condition of the bank and verifying the real picture of its capital. Such a situation makes it difficult for the regulatory body to supervise and control it. Such a trend is a major obstacle to maintaining the financial soundness of private sector banks and the stability of the banking sector. In this situation, the new policy has emphasized on bringing transparency in the actual ownership structure of banks.
According to the policy, from now on, the central bank will create a database of shareholders holding 2 percent or more. Various methods will be adopted to ensure the accuracy of the information in this database. Each bank will also have a specific database of shares of its own institution. The managing director, head of the share department and company secretary of the bank will be responsible for the accuracy of this information. If any false information is given to the central bank in this regard, the central bank can take disciplinary action against them in light of the Bank Companies Act.
