The Finance Companies Bill, 2023 was placed in Parliament on Sunday to deal with loan defaulters in the country.
Law Minister Anisul Huq, in absence of Finance Minister AHM Mustafa Kamal, placed the Bill and it was sent to the respective scrutiny committee with a three-day deadline to submit its report.
According to the Bill, someone can be considered a wilful defaulter for three reasons. If the money is not paid within two months, a criminal case can be filed against the wilful defaulter. The defaulter will not be able to go abroad and there will be a trade licence ban.
The three reasons why someone can be declared a wilful defaulter are if the person does not repay the loan on time despite having the ability, if he uses the loan for other reasons instead of using it for the reason the loan was given, and if the documents submitted for the loan are later found as fake.
Regarding the draft law, Cabinet Secretary Mahbub Hossain had earlier said that the existing law did not specify what percentage of shares a person can hold in a financial institution. It is now being said that no more than 15 per cent of the shares can be taken from the same family.
The number of directors was not specified in the current law. It can now have two independent directors and 15 directors in total.
However, if the amount of shares from a family is less than 5 per cent, there will be a director. If more than 5 per cent, there can be a maximum of two. It would not allow to have more than two directors from one family.
In the existing law, there was no term for the director. Now the director's term is being extended to three years and one can be a director for three consecutive terms.
As per the Bill, banks can create subsidiary companies. According to the new law, financial institutions in Bangladesh cannot be made subsidiary companies without the approval of the bank.
There was no directive in the existing law regarding interest waivers. Now it has been said that interest cannot be waived without the permission of the Bangladesh Bank. Full interest can never be waived. The cost of funds must be recovered.
In some cases, fines have been increased. The punishment for not complying with the conditions of the licence has been increased from Tk 10 lakh to a maximum of Tk 50 lakh.
Under the existing law, the company has to pay a fine of Tk 10 lakh if the loan is given in violation of the rules. It has been amended to say that Tk 10 lakh or whichever is higher than the existing status of the loan released will have to be paid as a penalty to every director and officer.
When a person is listed as a wilful defaulter, the Bangladesh Bank can prepare a list of wilful defaulters from the concerned agencies and impose a ban on foreign travel, a ban on trade licences, Bangladesh Securities and Exchange Commission (BSEC), Registrar of Joint Stock Companies and Firms (RJSC).
This means that when a person is identified as a wilful defaulter, he will be banned from doing any business or going abroad.
If he does not repay within two months, a criminal case can be filed directly.
