The government has promulgated the Bank Company (Amendment) Act 2007 which said banks would need to increase their respective capital base to Tk 200 crore and keep the number of directors limited to 13.

The number of directors will not exceed 13 and the amended act restricts family members to two positions of director if the family owns more than 5 per cent of the shares of the bank company and to one position if a family owns less than 5 per cent of the shares. The act by family means spouse, parents, children, brothers, sisters and dependants, said the Bank Company (Amendment) Act 2007 promulgated on October 8.

The tenure of a director can be two consecutive terms, each of three years. The directorship can be continued with a gap of a term after the two consecutive terms.

The cabinet on August 28 passed the amendment of the Bank Company Act 1991.

The amendment said no organisation could use the word ‘bank’ or any other word derived from ‘bank’ in its name. Only the concerns engaged in bank business are entitled to use the work ‘bank’ word in the names, according to the amendment.

The central bank holds the authority to inspect any cooperative institutions and instruct them as the Bangladesh Bank can inspect and give instructions to any banks.

If any bank violates the ‘restrictions on loans and advances’ clause of the act, directors and officials concerned will be penalised with imprisonment of a maximum of three years or a fine of Tk 1 lakh to Tk 10 lakh, or both.