The interim government is set to double the minimum paid-up capital required to run a bank to Tk 2 billion (Tk.200 crore) soon and is also devising tough regulations for bank directors to make such financial institutions more accountable. To incorporate the planned measures, the Banking Company Act 1991 will be amended further through an ordinance, which will also vest the Bangladesh Bank with more power to formulate banking regulations.

According to the existing laws, a banking company now has to have a minimum paid-up capital of Tk 1 billion, increased from Tk 400 million in 2003. The prime objective of increasing the paid-up capital requirement is to protect the interests of depositors. The responsibility and accountability of bank directors will also increase once their capital involvements rise. The planned amendment to the banking company act will be made through an ordinance to be issued soon after it gets the approval of the council of advisers at a meeting to be held soon.

Currently, a bank director can be on the board for six years with a one-year interval. But the government is likely to stretch the interval to three years. Once the law is amended, the owners of any financial institution involved in banking business without a licence will face a maximum of 10 years imprisonment, instead of the current seven years. It will also make a banker liable to five years imprisonment instead of the current three years for making a false statement on any account, return or balance sheet or any other document.

The amended law will give the Bangladesh Bank the power to formulate rules to regulate the scheduled banks more prudently. Currently the Bangladesh Bank can only issue circulars from time to time, which are often challenged in the High Court.