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Lecture Synopsis on An overview on Financial System of Bangladesh – Relevant Sections of Bangladesh Bank Nationalization rder !

"#$ And Banking %ompanies Act !""! for Fund &anagement

Md. Jaker Hossain Joint Director Foreign Exchange Inspection and Vigilence Departmrnt, Bangladesh Bank Head Office , Dhaka

Selected Indicators Bangladesh Bank Order. 1972 !T"e #ollo$in% Order &ade '( t"e President) on t"e ad*ice o# t"e Pri&e Minister o# t"e Peo+le’s Re+. (.')ION.'lis"ed #or %eneral in#or&ation2 3 GOVERNMENT OF THE PEOPLE’S REPUBLIC OF BANGLA ESH MINISTR4 OF LA5 AN PARLIAMENTAR4 AFFAIRS (./01) is "ere'( +. 127 of 1972 . 9$67P!8. %0'1' [Published in the Bangladesh Gazette.st Octo'er) .I'"&N)'(2 '**'I(. 0&'% O**I-&.a4 %i5ision) NO)I*I-')ION No. 9$1st Octo8er.I-')ION. 1972 (President’s Order No.I.)(2 O* .a4 %i5ision) President’s Order No. Extraordinary. dated the 3lst October. 'N% P+B. 19 !" GOVERNMENT OF THE PEOPLE’S REPUBLIC OF BANGLA ESH "INI.'%&. 2##$ %&P'()"&N) O* P+B.0 B'N1.'3 'N% P'(. B'N/. Part IIIA. 127 of 1972) Incorporating all a end ents thereto !pto "arch 1#.(&.'lic o# Ban%lades" on t"e -.

es7 -0'P)&( II &.ection 7 Stat.)'B.re +endin% on t"e a++ointed da( '( or a%ainst t"e State Ban6 in relation to its .ection $ Ban%lades" Ban6 and its nat.CHAPTER I P(&.I"IN'(2 . IN-O(PO(')ION.nder Article :) .0"&N).ection 1 : )itle: T"is Order &a( 'e called t"e Ban%lades" Ban6 Order) ./0.s e&+lo(ee a#ter . 'N% "'N'/&"&N) . .nderta6in% $"ic" "as *ested in t"e Ban6 ./01 Section 17 e#inition o# so&e &a8or iss.ection 6 State Ban6 in and in relation to Ban%lades" s"all 'e dee&ed to "a*e 'een trans#erred to) and *ested in) t"e Ban6 .re o# Or%ani9ation . -'PI)'.ection < All s.ection .re o# Ban%lades" Ban6 .ct.its) a++eals) or ot"er le%al +roceedin%s o# $"ate*er nat.s o# t"e Pre*io.ection = Location o# t"e Head O##ice o# Ban%lades" Ban6 . Ca+ital Str.I.

ind!str?. *inance %i5ision CC "e 8er (5) . -hair an (ii) "inister for -o erceCC. in the opinion of the /o5ern ent.. Internal (eso!rces %i5ision. ha5e had eBperience and sho4n capacit? in the field of erce.. "e 8er (iii) /o5ernor. consisting of9 ) )here shall 8e an &Bec!ti5e -o ittee consisting of9 (a) the /o5ernor> (8) the %irector no inated !nder s!87cla!se (8) of cla!se ($) of 'rticle 9> (c) one %irector elected 8? the Board fro a ongst the %irectors no inated !nder s!87cla!se (c) of cla!se ($) of 'rticle 9> and7 = 7 (d) one %irector appointed 8? the /o5ern ent fro a ongst the %irectors no inated !nder s!87cla!se (d) of cla!se ($) of 'rticle 9. . "e 8er (5i) "e 8er (Progra . or agric!lt!re> (d) three /o5ern ent officials to 8e no inated 8? the /o5ern ent )here shall 8e a -o!ncil for the co7ordination of fiscal. "e 8er (i5) .ection11 "eeting of the Board of %irectors . Planning -o ission "e 8er onetar? and eBchange rate policies.. hereinafter called the -o 7ordination -o!ncil.ecretar?. fro 8anking.ection12 &Bec!ti5e -o ittee ing). Bangladesh Bank C. co a ongst persons 4ho.ection 9 Board of %irectors: )he Board shall consist of9 (a) the /o5ernor> (8) a %ep!t? /o5ernor to 8e no inated 8? the /o5ern ent> (c) @fo!r %irectors 4ho 4ill not 8e /o5ern ent officialsA6 to 8e no inated 8? the /o5ern ent.. trade.ecretar?. (i) "inister for *inanceCCCC..

ce+tional B.nt o# t"e Go*ern&ent) and to &a6e +a(&ents on 'e"al# o# t"e Go*ern&ent7 .c"an%e . O* )0& B'N1 .t"orit( to #i.( or redisco.t"ori9ed #or sellin% to or '...t"orit( to eclare Tender C.t"ori9ed B.c"an%e or ot"er co&&ercial +a+er eli%i'le #or +.ection 2# Underta6e to acce+t &onies #or acco.ection 1< Sco+e o# B.ection 17 E.ection1$ %irectors eligi8ilit? in their position .siness .nt 'ills o# e.siness .ection 22 A. 'N% *+N-)ION.t"ori9ed dealer in Ban%lades" a++ro*ed #orei%n e.ection 1= A.rrenc( .siness . %irectors )en!re in their position.ection 19 A.ection 21 A.rc"ase .ection 1.IN&.(in% #ro& an( a. t"e standard rate at $"ic" it is +re+ared $"ic" it is +re+ared to '.ection 16 (e o5al proced!re of the /o5ernor -0'P)&( III B+. .

ection $< E*er( sc"ed.nt o# t"e Ban6 Notes #or t"e ti&e 'ein% in circ.ection 2$.e Ban6 Notes .rrenc( Notes and t"ose $"ic" $ere in circ.e e+art&ent s"all 'e an a&o.nt o# $"ic" s"all not 'e less t"an s.al to t"e total o# t"e a&o.ection 26 Ban on #i*e ".c" deno&inations and o# s.ndred r.ed 'e#ore <t" da( o# =.cessi*el( soiled .ection $# Assets and lia'ilities o# t"e Iss.ndred r.e Ban6 Notes $"ic" are torn) de#aced or e. Sole ri%"t to iss..e to 'e le%al tender at an( +lace in Ban%lades" .e e+art&ent7 .c"an%e #or coin $"ic" is le%al tender in Ban%lades" .ection 29 No +erson s"all as o# ri%"t 'e entitled to reco*er #ro& t"e Go*ern&ent or t"e Ban6 t"e *al.tilated or i&+er#ect Ban6 Note7 .c"an%e #or Ban6 Notes and Ban6 Notes on de&and in e.ection $2 T"e lia'ilities o# t"e Iss.ection 2= T"e Ban6 s"all not reiss.e o# an( lost) stolen) &. .lation in Ban%lades" on t"e a++ointed da( s"all contin.+ees iss.nt e>.ection $2 T"e Ban6 s"all iss.ne) .lation7 .ed '( t"e Ban6 s"all 'e in s./0.c" +ortion o# its total de&and and ti&e lia'ilities as &a( 'e +rescri'ed '( t"e Ba n6 +.c" desi%n) #or& and &aterial as &a( 'e a++ro*ed '( t"e Go*ern&ent on t"e reco&&endations o# t"e Board7 .rs.e Ta6a coin on de&and in e.led 'an6 s"all &aintain $it" t"e Ban6 a 'alance t"e a&o.ant to t"e &onetar( +olic( o'8ecti*es o# t"e Ban6) '( noti#ication in t"e o##icial Ga9ette7 .+ees and one ".ection 27 T"e Ban6 Notes &ade and iss.ection $7 . All Ban6 Notes) Coins and C.ection 2.

'&ittin% Ret.&-)ION 'N% *+(NI.ection .nts o# t"e Iss.le Ban6s . .$ A..t"orit( to &a6e 'o.T"e Ban6 s"all &aintain at all its o##ices and 'ranc"es an . .7 E .ection $9 Co&+ilation and +.ection <# T"e Ban6 &a( esta'lis" and &aintain a F.ection .ired credit in#or&ation -0'P)&( DI /&N&('.nd ..2 e#inition o# Ban6in% Co&+an() 'orro$er ? Credit in#or&ation .nd to 'e called t"e R.= A.e o# Ta6a t"ree cores &a( 'e allocated #or t"e +.it or ot"er le%al +roceedin%s s"all lie a%ainst t"e Ban6 or an( o# its o##icers #or an(t"in% $"ic" is in %ood #ait" -0'P)&( ID -O.'&ission o# t"e $ee6l( acco.'lis"in% t"e consolidated state&ent .<.nd .6 .ection 69 Sec.ection .ral Credit F.e e+art&ent and Ban6in% e+art&ent .r+ose '( t"e Go*ern&ent and s"all 'e "eld '( t"e Ban6 as t"e Reser*e F.'&it an( re>.1 No s.rities o# t"e *al.ection $= S. .ection .+3to3date list o# 'an6s declared '( it to 'e sc"ed.# S.led 'an6s .ection ..rns and Go*ernor’s a++earance 'e#ore t"e Parlia&entar( .t"orit( to collect Ban6in% in#or&ation #ro& t"e Sc"ed.0IN/ O* -(&%I) IN*O("')ION .nd t"e 'an6in% co&+anies to s.

Pro#it Pa(a'le to t"e Go*ern&ent .ection <1 T"e Ban6 &a( esta'lis" and &aintain a #.ection <2 T"e Ban6 &a( esta'lis" and &aintain a F.rrenc( notes) sec.strial Credit F. or '.nd to 'e called t"e Ind.ection 76 T"e Ban6 s"all not 'e lia'le to +a( an( inco&e ta.nd .nd .nts .sto&s .+er3 ta.lt.idation .ection 7.ection <.nd .ection 7< T"e Ban6 s"all not 'e +laced in li>.nd to 'e called t"e E.nd .t( on %old) sil*er) coins) c. on an( o# its inco&e) +ro#its or %ains .ection 72 R.siness +ro#its 3ta.les re%ardin% t"e Pension F.ection <6 771 A.) s.+ort Credit F.dit o# t"e Acco.<//7 .ection 77 . T"e Ban6 s"all not 'e lia'le to t"e +a(&ent o# C..nd to 'e called @A%ric.ection <$ T"e Ban6 &a( esta'lis" and &aintain a F.nd and Pro*ident F.rit( +a+ers) .t( .nder t"e Sta&+ Act) .ection 7$ Lia'ilit( #or t"e +a(&ent o# an( Sta&+ .ral Credit Sta'ili9ation F.

ection =# Po$er to de+./0.st Octo'er) . BA7P7O7 No71 o# ./017 ABU SA4EE CHO5 HUR4 President) Peo+le’s Re+.Po$er o# t"e Go*ern&ent i# Ban%lades" Ban6 #ails to carr( o.t an( o# its o'li%ations i&+osed on it .te an( e&+lo(ee to an( +osition as it dee& #it .t( Go*ernor ./:A BAct CCCIII o# .'lic o# Ban%lades"7 NASIMU IN AHMA =oint Secretar(7 .istence o# t"e Board) t"e Go*ernor &a( $it" t"e a++ro*al o# t"e Go*ern&ent &a6e re%./0.ection =2 In t"e e*ent o# non3e./:AD and t"e Ban%lades" Ban6BTe&+orar(D Order) .lations .ection =1 (esponsi8ilit? to take i .t"orit( to &aintain secrec( .D are "ere'( re+ealed7 ACCA) T"e -.ection 7= A.lations ediate eas!res at the ti e of econo ic crisis.ection =$ Ban%lades" Ban6 instead o# all +laces o# State Ban6 o# Pa6istan in all re%.ection =. T"e State Ban6 Act) .ection 79 Go*ernor’s +o$er to dele%ate t"e +o$er to a e+. .

( 'ower to suspend operation of this Act -( . 1#. Prohi8ition of certain for s of trading. . 9.'ct NO.efinitions /( Act to override articles0 memorandum0 etc( -hapter II B!siness of Banking -o panies 7. +se of the 3ord FBankF or an? of its deri5ati5es. 1. %isposal of non78anking assets. B!siness of Banking -o panies =. of 1991 'n 'ct ade to ake pro5isions for 8anking co panies -hapter I 'reliminary !( Short title $( Application of other Acts )( Limited application of this Act to co*operative +anks and other financial institutions( .

Po4er of the Bangladesh Bank to control the gi5ing of ad5ances $#. disco!nt etc.11. (estrictions on the pa? ent of di5idends 2$. (estrictions on the e plo? ent of co 2. 16. ..7 $2. &lection of ne4 directors 1<. "ini ! paid !p capital and reser5es. (eg!lation of paid7!p capital.!8sidiar? -o panies. (estrictions on loans and ad5ances.icensing of 8anking co panies. Dacanc? of the office of a director 1=. "aintenance of liI!id assets $. 1. (eser5e *!nd. (estrictions on the respite of loans 29..o e r!les concerning 8enefits for directors 19. 'ssets in Bangladesh on directors . Prohi8ition of floating charge on assets. 26.. -ash (eser5e 2<. s!8scri8ed capital and a!thoriGed capital and 5oting rights of share7holders. (estriction on the period of office of directors 17. Prohi8ition of charge on !npaid capital 21. and transfer of eBisting places of 8!siness $$. .7 27. 22. (estrictions on re o5al of records and doc! ents 1$. 8rokerage. H!risdiction of -o!rts regarding interest rates $1. (estrictions on opening of ne4. Prohi8ition of e plo? ent of anaging agents and restrictions on certain for s of e plo? ent 12. . 2=. (estrictions on co ission of sale of shares. 2#.

Po4er of the Bangladesh Bank to gi5e directions . Po4er to call for certain infor ations etc 62.. )rans ission of 8alance sheets etc.7 66.2. 0alf7?earl? report etc.!8 ission of a report on assets and lia8ilities to the Bangladesh Bank 6<. Po4er to p!8lish infor ation $=. Po4er to ake p!8lic anno!nce ents ade !nder section 62 6$..#.9. 'cco!nting pro5isions not retrospecti5e . Inspection . 'ccessor? pro5isions for 4inding !p etc.$6. .7. (estrictions . of cash deposits and assets.<. -onseI!ence of anno!nce ents 6. %ispla? of a!dited 8alance sheets 8? 8anking co panies incorporated o!tside Bangladesh .$. Po4er of the Bangladesh Bank to re o5e a director etc. *!rther po4ers and f!nctions of the Bangladesh Bank 6#.. of a 8anking co pan? .!8 ission of reports . '!dit . .6. %isposal etc.1. Po4er of the Bangladesh Bank to dis iss the Board of %irectors of a 8anking co pan? . $7. 'cco!nts and 8alance sheet $9. -hapter fo!r . -ertain pro5isions of the 'ct not to appl? to certain 8anking co panies -hapter III Illegal 8anking of co&+anies etc 61.=. to (egistrar . +nclai ed assets and 5al!a8les $<.

Booked depositorsJ credits to 8e dee ed pro5ed 7. Preferential pa? ent to depositors. Po4er to dispense 4ith eetings of creditors etc 7$.7 77. Po4er of the /o5ern ent to <1. (estriction on sta? of proceedings 7#. -o!rt liI!idator. . (estriction on 5ol!ntar? 4inding !p. -o panies 'ct to appl? to liI!idators <9. 'ppoint ent of the Bangladesh Bank etc. )he )ri8!nal to ha5e po4ers of a ci5il -o!rt.7 <7.!spension of 8!siness and 4inding !p of 8anking co panies. 7<.7 <$. Proced!re of the )ri8!nal ake sche e. <#. (estriction on co pro ise or arrange ent 8et4een 8anking co panies and creditors. 3inding !p 8? 0igh -o!rt <<.!8 ission of a preli inar? report 8? the official liI!idator 71. 69.7 76. "oratori! co panies in respect of a 8anking co pan? and reconstr!ction or a alga ation of 8anking .Prohi8ition of certain acti5ities in relation to 8anking co panies 67. <. as liI!idator <=.. 'cI!isition of the !ndertakings of 8anking co panies. -o pensation to 8e gi5en to the share7holders of the acI!ired 8ank..!spension <6. . -onstit!tion of the )ri8!nal <2. -hapter siB . Notice to preferential clai ants etc 72. P!nish ents for certain acti5ities in relation to 8anking co panies -hapter fi5e 6=.

pecial pro5isions for 8anking co panies 4orking !nder sche es or arrange ents at the co ence ent of the 'ct 9#. Po4er of the 0igh -o!rt %i5ision to decide all clai s in respect of 8anking co panies =#. . )ransfer of pending s!its. -hapter 2 not to appl? to 8anking co panies 8eing 4o!nd !p 1##.ist of the de8tors. %oc! ents of 8anking co pan? to 8e e5idence. %oc! ents regarding paid clai s to 8e gi5en 8ack to c!sto ers 1#$. Bangladesh Bank to tender ad5ice in 4inding !p proceedings 9$. P!8lic eBa ination of directors etc. . %istrict "agistrate to assist liI!idator in taking charge of propert? of 8anking co panies 8eing 4o!nd !p 9<.pecial pro5isions for p!nishing offences in relation to 8anking co panies 8eing 4o!nd !p. Po4er to inspect 9. 99.7 =. 'ppeals 91. shall 8e constr!ed as containing references to past directors etc. of 8anking co panies in certain cases =9.7 one? 1#2. . ==.pecial pro5isions to ake calls on contri8!tories =$.7 =1..pecial period of li itation 92.pecial pro5isions for delinI!ent directors etc =<. &nforce ent of orders and decisions of 0igh -o!rt %i5ision 97. -hoice for the pa? ent of deposited 1#. (eferences to directors etc. . =6. +naccepta8ilit? of clai s of other persons on deposits 1#6. %!t? of directors and officers of 8anking co panies to assist in the realiGation of propert? etc =7. Po4er of the /o5ern ent to ake r!les on the preser5ation of records. Po4er to call for ret!rns and infor ation 96. Dalidation of certain proceedings 1#1. Po4er of the 0igh -o!rt %i5ision to ake r!les.7 9=.peed? disposal of 4inding !p proceedings 7=. -hoice for gi5ing 8ack safekept articles.-hapter se5en . .7 . &Ba ination of directors and a!dit of acco!nts. ..7 =2.. -hapter se5en to o5erride other 'cts 79.

'pplication of fines. +naccepta8ilit? of clai s of other persons on articles deposited for safekeeping 1#7. -ogniGance of offences 112. 'lteration of e orand! of a 8anking co pan? eas!res 11=. +naccepta8ilit? of clai s of other persons on articles deposited in lockers -hapter eight "iscellaneo!s 1#9. . directors etc. &Bchange of infor ation 12#.7 11. -ertain clai s for co pensation 8arred 119. (estriction on acceptance of deposits 4ithdra4a8le 8? cheI!e 11<. Po4er to ake r!les . /i5ing 8ack of articles deposited in lockers. of a 8anking co pan? to 8e p!8lic ser5ants 111.1#<.7 1#=.. (estriction on the change of na e 8? a 8anking co pan? 117. Bangladesh Bank to take p!niti5e 11$.pecial pro5isions for pri5ate 8anking co panies 116. -hair en. P!nish ents 11#.

121. (epeals and sa5ings . Po4er to eBe pt in certain cases 122. Protection of action taken in good faith 12$.