We are of the opinion that the embargo on banks, insurance companies and other financial institutions to nominate its directors on the Board of a financial institution is based on a reasonable classification. It appears to us to be obvious that the legislative policy is to exclude the same set of persons to manage, control, regulate and monopolize the policy making functions of capital generating financial institutions. A textile manufacturing company is generating goods and it may not be immoral from the point of view of financial policy to alios the directors of such a company to be represented on the Board of a financial institution in which the textile manufacturing company may have a shareholding interest. But it appears to be the police of the legislature that directors of capital generating institutions should not be allowed to flock together in a financial institution to control and monopolize the capital market.

City Bank Ltd. Vs. Bangladesh Bank & Ors 8 BLT (AD)-20.


Section 25(3) does not on terms make any distinction between directors who represent their own shareholding individually and nominee directors who represent their companies shareholdings. It applies to all, whether they are individuals or nominees of a bank, insurance or financial institution. [Para-21]

Phoenix Leasing Ltd. & Ors. Vs. Bangladesh Bank & Ors 8BLT (AD)-117

Section-25(3) and 48

Withdrawal of exemption by Bangladesh Banks Notification dated I4.12.1996 is prospective and not retrospective as contended by the petitioners learned Counsel. This interpretation of the impugned notification dated 14.12.1996 is not acceptable on the face of it. Section 25(3) of the said Act is a barring provision making certain persons
ineligible for being appointed as directors of a financial institution. Until there is an exercise of power of exemption under section 48. the bar remains as a permanent provision in the said Act. When an exemption is given the bar under section 25(3) is relaxed: but when the exemption is withdrawn the legal consequence is he revival of the permanent bar under section 25(30. which will affect the existing nominee directors including petitioner Nos. 2-5 The question of prospectively and retrospectively does not arise in these circumstances. It is a case of certain section of an Act remaining in abeyance as if in a state of hibernation because of an exemption granted and the revival of it as soon as the exemption is withdrawn. [Para-15]

Phoenix Leasing Ltd. & Ors. Vs. Bangladesh Bank & Ors 8BLT (AD)-117