Salient features of important provisions of Bank Companies Act-1991 (Amended-2013)


The Banking Companies Act, 1991 was enacted in February 1991 in order to make the role of Bangladesh Bank in dealing with licensing, monitoring, regulating and supervising the banking sectors. The Act was subsequently amended 3 (three) times in 1993, 1995 and 2013 which empowers Bangladesh Bank further.



Banking Company: “Banking Company” means any company transacting the business of banking in Bangladesh, and includes all new banks and special banks.


Banking: “Banking” means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft and order.


Demand Liabilities:  “Demand liabilities” means liabilities which must be met on demand.


Secured loan or advance: “Secured loan or advance” means a loan or advance made on the security of assets the market value of which is not at any time less than the amount of such loan or advance, and “unsecured loan or advance” means a loan or advance not so secured, or that part of it which is not so secured.


Special Bank: “special bank” means any bank established or formed by or under any Act in force for the time being and includes such banks as the Government may, by notification in the official Gazette, declare special banks for the purpose of this Act;


Business of Banking Companies (U/s-7):

a) The borrowing, raising or taking up of money;

b) The lending or advancing of money;

c) The drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hoondees, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates, musharika certificates, modareka certificates, such other instruments as may be approved by the Bangladesh Bank,


d) The granting and issuing of letters of credit, traveler’s checks;

e) The buying, selling and dealing in gold and silver coins and coins of other metals;

f) The buying and selling of foreign exchange including foreign bank notes;

g) The acquiring, holding, issuing on commission, underwriting and dealing in stocks, funds, shares, debenture stock, obligations, as may be approved by the Bangladesh Bank;

h) The purchasing and selling of bonds, scripts or other forms of securities and such other instruments as may be approved by the Bangladesh Bank;

i) The negotiating of loans and advances;

j) The receiving of all kinds of bonds or other valuables on deposit or for safe custody or otherwise;

k) Providing vaults for the safety of the deposits;

l) The collecting and transmitting of money against securities;

m) Acting as agents for the Government, local authorities or any other person;

n) The carrying on of agency business of any description including the clearing and forwarding of goods and acting as a law agent on behalf of customers


o) Contracting for public and private loans and negotiating and issuing the same;

p) The carrying on and transacting of every kind of guarantee and indemnity business;


q) Acquiring, holding and managing of any property or any right, title or interest in any such property


r) Undertaking and executing trusts;

s) Undertaking the administration of movable and immovable property as executor, trustee or otherwise;


t) The acquisition, construction, maintenance and alteration of any building or works necessary or convenient for the purpose of the banking company;

u) Selling, improving, managing, exchanging, leasing, and mortgaging any part of the property or rights of the banking company;

v) Doing all such other things as are incidental or conducive to the promotion or advancement of the business of the company;

w) Any other form of business which the Government may, by notification in the official Gazette, specify as a form of business


Prohibition of certain forms of trading (U/s-9):

No banking company shall directly or indirectly deal in the buying, selling or exchange of goods, except in connection with the realization of security given to or held by it, or engage in any trade or buy, sell or exchange of goods in connection with bills of exchange received for collection or negotiation or with such of its business as is approved under section 7.


Statutory reserve (U/s-24):

The Bank Companies Act, 1991 requires the bank to transfer 20% of its current year’s profit before tax to reserve until such reserve equals to its paid up capital.


Cash reserve (U/s-25):

Every banking company, not being a scheduled bank, shall maintain in Bangladesh by way of cash reserve with the Bangladesh Bank or its agent, or both banks in equal parts, a sum equivalent to not less than five per cent of its time and demand liabilities:

Provided that the Bangladesh Bank may, in any particular case, change, by notification in the official Gazette.


Restrictions on loans and advances (U/s-27):

(1) No banking company-

a) shall make any loans or advances on the security of its own shares;

b) shall, without security, make any loan or advance to any of the following persons or institutions –

i) any of its directors;

ii) any member of the family of any of its directors;

iii) any commercial institution or private company in which the banking company itself, or any of its directors or any member of the family of any of its directors is involved as director.

iv) any public limited company which is in some way or other controlled by the company itself, or any of its directors or any member of the family of any of its directors


(2) No banking company shall give to any of the following persons or institutions any loan or advance without the approval of the majority of the directors, excluding the director concerned,-


a) any of its directors; or

b) any person, commercial institution or company in which any of the directors of the said banking company is interested as partner, director or guarantor.


Restrictions on opening of new, and transfer of existing places of business (U/s-32):


(1) Without the previous permission in writing of the Bangladesh Bank-

a) No banking company shall open a new place of business in any part of Bangladesh or change the location of an existing place of business; and

b) No banking company incorporated in Bangladesh shall open a new place of business outside Bangladesh or change the location of an existing place of business outside Bangladesh.


(2) The Bangladesh Bank may, before giving the permission referred to in subsection (1) to any banking company, require to be satisfied by an inspection.


Unclaimed deposits and valuable articles (U/c-35):

(1) In the case that-


a) at any branch in Bangladesh of any banking company there has been no business connection with regard to an amount payable in Bangladeshi currency of anyone other than the Government, a minor or a Court for a period of ten years from such date as is specified in the following clauses, namely:-


i) in the case of fixed term deposits, from the expiry of the term; and

ii) in the case of other deposits, from the date of the last transaction or the last acknowledged receipt of a statement of account or the last request for such a statement; or


b) a dividend to be payed on a deposit, a bonus, a profit or any other payable amount has not been claimed or payed for the period of ten years from the date it was to be claimed or payed; or

c) one branch of a banking company has transmitted to another of its branches a cheque, or bill of exchange and the amount of money has not been paid to it for a period of ten years from the date of issue, certification or acceptance of that cheque, or instrument; or

d) an approved security, share, article or valuable given into custody of a banking company, henceforth generally and particularly referred to as valuables, has not been inspected or recognized by the depositor for a period of ten years from his last inspection or recognition,


The banking company shall transmit within three month by registered post a written notice together with a form to acknowledge receipt to the last address given of the creditor of that amount, cheque, or bill of exchange or a person acting in his behalf or the depositor..

(2) Three months after the transmission of the notice a response still not having been received, the said company shall, as the case may be, take the following measures, namely:-


a) The payment of an amount of money equivalent to that amount plus the interests to the Bangladesh Bank;

b) In the case of a cheque or bill of exchange, the payment of an amount of money equivalent to the amount plus the interest if any the bank were to pay on presentation of the cheque etc. to the Bangladesh Bank;

c) in the case of valuables, the transmission of those valuables subject to the conditions of the liability, instrument or direction under which they had been given into custody of the banking company to the Bangladesh Bank.


Special Audit (U/s-39A):

If the Bangladesh Bank on consideration of an audit report or an inspection report has sufficient reason to be satisfied that it is necessary to audit the activities of any special part of the activities of banking company, it may take initiatives to do such special audit.


Inspection (U/s-44):

(1) The Bangladesh Bank may at any time directed by the Government carry out an inspection of any banking company and its ledgers and accounts by one or more of its officers. After such inspection, supply to the banking company a copy of the report prepared on the basis of that inspection.

(2) The Bangladesh Bank may at any time, by one or more of its officers, examine in detail the ledgers and accounts of any banking company. After such examination, supply to that banking company a copy of the report prepared on the basis of that examination.

(3) It shall be the duty of the directors, officers and employees of a banking company or of its external auditors, to produce, on demand all statements and information relating to it within such time as the inspector or examiner may specify.

(4) The person making an inspection may examine on oath any director, officer or employee or external auditor of the banking company concerned with regard to any subject related to that banking company.

(5) The Bangladesh Bank shall, if it has been directed by the Government to carry out an inspection or examination and to the detriment of the interests of its depositors, may, after giving reasonable opportunity to that company to make a representation in connection with that report, by order in writing,-


a) prohibit the banking company from taking fresh deposits; and

b) may apply for winding up


c) for the sake of interest of the depositors, Bangladesh Bank may pass orders to take measures as later deems fit to do so.


Power of the Bangladesh Bank to give directions (U/45):

(1) Where the Bangladesh Bank is satisfied that-


a) in the public interest,or

b) to provide for the improvement of the monetary policy or banking policy, or

c) to prevent the affairs of any banking company; or


d) to secure the proper management of any banking company,


Power to call for certain information etc. (U/s-51):

Where the Bangladesh Bank is of opinion that any banking company or any other person is violating in the course of carrying through a banking business, it may-


a) within the prescribed time require that company or person, or any person being or, at any time, having been engaged in or connected with the business of banking, to submit all information, documents or records which are related to the above mentioned business;

b) authorize any person to enter and search any place of such company or person and to seize all books, account-books, documents and records relating to the banking business.


c) inspect or examine any of the books, account-books, documents or records and may question any person, officer or employee referred to in that clause;


Punishments for certain activities in relation to banking companies. (U/s-57):

(1) No person shall-

a) Obstruct any person from lawfully entering or leaving any office or place of business of a banking company;

b) Hold, within the office or place of business of any banking company, any demonstration which is violent or do anything which obstructs the usual activities and transactions of the banking company; or

c) Act in any manner calculated to undermine the confidence of the depositors in the banking company.


(2) Whoever violates any provision of subsection (1) without any reasonable excuse shall be punishable with imprisonment of no more than two years or a fine of no more than twenty thousand Takas or both.


Nomination for the payment of deposited money. (U/s-103):

(1) Where a deposit held by a banking company to the credit of one or more than one persons, individual has, or several persons have jointly deposited money with a banking company in his or in their name, that individual depositor may separately or, as the case may be, the group of depositors may jointly, in the way prescribed, choose a person to which, in the case of the death of the individual depositor or of all of the joint depositors, the deposited money shall be given.


Claims of other persons on articles deposited in custody not maintainable (U/s-106):

Notice of claims regarding articles deposited in safe custody by a person other than the person shall not be maintainable nor shall be bound to take measures in accordance with any notice.


Return of articles kept in safety lockers (U/s-107):

Where a person has hired a locker located in the safety vaults or elsewhere of a banking company, in the case of his death, permit the person nominated by him the locker back to nominee.

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