The rot starts at the top, it is often said. And it is this pandemic that the central bank is looking to tackle in the new Banking Companies Act.
For instance, it has proposed interviewing both directors and managing directors of private banks before they are appointed, as per the draft of the amendment to the BCA that has been uploaded on the finance ministry's website on Monday for the opinion of the general public.
All stakeholders has been requested to give their opinion within 21 working days.
The Bangladesh Bank's intervention into the appointment of key personnel in private banks does not just end there: the interview board will also nominate additional and deputy managing directors, all top executive posts of the lenders.
All very well, but had the draft proposed state banks, where irregularities are dime a dozen, go through the same rigour in appointing top executives, it would seem the amendments has its heart in the right place.
The draft also bars any individual involved in any fraudulent activities or financial crimes or with negative observations of financial regulators from holding top posts in banks.
Directors who show default loans as unclassified by taking stay-orders from the High Court will also lose their position on their respective bank boards.
However, those who reschedule their default loans as per the banking norms will be spared.
The number of directors of a bank will be a maximum of 20, of which one-fifth will have to be appointed as independent directors.
The qualifications of independent directors have been mentioned in the draft act as well.
Any individual who previously served as director, officer, advisor, consultant or auditor of the lender cannot be its independent director.
A person will also not be permitted to hold independent directorship of he or she has an ongoing relationship with other banks as director, officer, advisor, consultant or auditor.
An alternative director will be permitted to serve the board of a bank for a maximum of six months and he/she can play the role for once a year.
In many cases, the alternative directors of some banks have long been serving the boards as the original directors have never visited the country.
The original directors will be forced to take part in the board meeting if the draft act pass muster in the parliament.
Any borrower who fails to pay back his/her loans despite his/her ability to do so will be termed a habitual defaulter, as per the draft act prepared by the finance ministry for banks.
Banks and financial institutions will have to publish the list of habitual defaulters with their pictures on the respective lenders' website and newspapers.
Mortgaged lands will have to be taken over by banks within one month of the borrower being declared a habitual defaulter.
Habitual defaulters will not get any trade licence and they will not be allowed to register their home and vehicles.
They will also be barred by the Registrar of Joint Stock Companies and Firms from opening new companies.
The draft act has also included a fresh provision to restructure, liquidate and merge troubled and weak banks.