THE BANGLADESH BANKS (NATIONALISATION) ORDER, 1972 (PRESIDENT’S ORDER), PART 1

( ACT NO. 26 Of 1972 )

[ 26th March, 1972 ]

WHEREAS it is expedient to provide for the taking over of the undertaking of certain banks in Bangladesh and for matters connected therewith or incidental thereto;

NOW, THEREFORE, in pursuance of the Proclamation of Independence of Bangladesh, read with the Provisional Constitution of Bangladesh Order, 1972, and in exercise of all powers enabling him in that behalf, the President is pleased to make the following Order:-

1. (1) This Order may be called the Bangladesh Bank (Nationalisation) Order, 1972.

(2) It extends to the whole of Bangladesh.

(3) It shall come into force at once.

2. In this Order, unless there is anything repugnant in the subject or context,-

(a) “Bangladesh Bank” means the Bangladesh Bank established by the Bangladesh Bank (Temporary) Order, 1971 (A. P. O. No. 2 of 1971);

(b) “Board” means the Board of Directors of a new bank;

(c) “Chairman” means the Chairman of the Board;

(d) “Director” means a Director of a new bank;

(e) “existing bank” means a bank specified in column 1 of the Schedule;

(f) “Government” means the Government of the People’s Republic of Bangladesh;

(g) “Managing Director” means the Managing Director of a new bank;

(h) “New bank” means a bank specified in column 2 of the Schedule;

(i) “prescribed” means prescribed by rules or regulations made under this Order;

(j) “Schedule” means the Schedule to this Order.

3. The provisions of this Order and any rule or regulation made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.
4. (1) On the commencement of this Order, there shall be constituted such new banks as are specified in column 2 of the Schedule.

(2) Every new bank shall be a body corporate having perpetual succession and a common seal with power, subject to the provisions of this Order, to acquire, hold and dispose of property, and to contract, and may sue and be sued in its name.

(3) Notwithstanding anything contained in this Order, every new bank may, until the 30th day of April, 1972, or until such time as the Government may, by notification in the official Gazette, fix, 1[* * *], use the name and seal of the existing bank concerned.

(4) The head office of every new bank shall be at Dacca.

5. 2[ (1) The paid-up capital and reserve capital of every new bank shall be not less than, that required to be maintained under section 13 of ব্যাংক কোম্পানী আইন, ১৯৯১ (১৯৯১ সনের ১৪ নং আইন) which shall be subscribed by the Government in such form and manner as may be determined by the Government] 3[ :

Provided that the Government may, by notification in the official Gazette, increase, from time to time, the amount of authorised capital or subscribed capital or both of any new bank if such increase is considered necessary in the interest of the business of the bank.]

4[ (2) The entire capital of each new bank shall stand vested in, and allotted to, the Government.]

6. On the commencement of this Order, the undertaking of every existing bank shall be transferred to and shall vest in, the new bank specified against such bank in column 2 of the Schedule.
7. (1) The undertaking of each existing bank shall be deemed to include all assets, rights, powers, authorities and privileges and all property, movable and immovable, cash balances, reserve funds, investments and all other rights and interests in, or arising out of, such property as were immediately before the commencement of this Order in the ownership, possession, power or control of the existing bank in relation to the undertaking within the territory of Bangladesh or in relation to the business of such undertaking outside Bangladesh, and all books of accounts, registers, records and all other documents of whatever nature relating thereto and shall also be deemed to include all borrowings, liabilities and obligations of whatever kind then subsisting of the existing bank in relation to the undertaking within the territory of Bangladesh.

(2) If, according to the laws of any country outside Bangladesh, the provisions of this Order by themselves are not effective to transfer or vest any asset situated in that country which forms part of the undertaking of an existing bank to, or in, the corresponding new bank, the affairs of the existing bank in relation to such asset shall, on and from the commencement of this Order, stand entrusted to the chief executive officer for the time being, of the new bank concerned, and the chief executive officer may exercise all powers and do all such acts and things as may be exercised or done by the existing bank for the purpose of effectively transferring such assets.

(3) The chief executive officer of the corresponding new bank shall, in exercise of the powers conferred on him by clause (2), take all such steps as may be required by the laws of any such country outside Bangladesh for the purpose of effecting such transfer or vesting, and may either himself or through any person authorised by him in this behalf realise any asset of the existing bank.

(4) Unless otherwise expressly provided by this Order, all contracts, deeds, bonds, agreements, powers of attorney, grants of legal representation and other instruments of whatever nature subsisting or having effect immediately before the commencement of this Order and to which the existing bank is a party or which are in favour of the existing bank shall be of as full force and effect against or in favour of the corresponding new bank, and may be enforced or acted upon as fully and effectually as if in the place of the existing bank the corresponding new bank had been a party thereto or as if they had been issued in favour of the corresponding new bank.

(5) If any suit, appeal or other proceeding of whatever nature in relation to any business of the undertaking which has been transferred under Article 6 is pending by or against the existing bank, the same shall not abate, be discontinued or be, in any way, prejudicially affected by reason of the transfer of the undertaking of the existing bank or of anything contained in this Order but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the corresponding new bank.

5[7A. Notwithstanding anything contained in Article 6 or 7, the undertaking shall not embrace and shall be deemed never to have embraced liabilities and obligations of whatever kind of existing bank whereunder such existing banks undertook liability (whether absolutely or otherwise) to do or carry out or procure the carrying out of acts or things outside Bangladesh, or the transfer or remission from outside Bangladesh to the territory of Bangladesh or to persons normally resident or carrying on business within that territory of any assets or property (including documents, cash, funds or choses in action).

7B. Nothing in Article 6 or Article 7 shall divest or be deemed to have divested existing banks of any liabilities or obligations referred to in Article 7A.]

8. (1) The Government shall give compensation to each existing bank for acquisition of such of its undertaking as has not already vested in Government by or under any law, and such compensation shall be distributed among the shareholders of the existing bank in the manner prescribed by rules made under this Order:

Provided that the total compensation payable to an existing bank under this clause shall not exceed the total paid up value of the shares held by the shareholders, among whom such compensation is to be distributed.

(2) The compensation payable under clause (1) shall be determined and paid in such form and manner as may be prescribed by rules made under this Order.

9. (1) The general superintendence, direction and management of the affairs and business of a new bank shall vest in a Board of Directors which shall 6[, subject to such general or special orders as the Government may give it from time to time,] be entitled to exercise all such powers and do all such acts and things as the new bank is authorised to exercise and do.

7[(2) Until the first Board of Directors is appointed by the Government under Article 10, the Managing Director appointed under Article 11 shall, subject to such general or special orders as the Government may give from time to time, exercise all powers, do all acts and things as may be exercised or done by the Board.]

10. The Board shall consist of the Managing Director 8[* * *] and six Directors to be appointed by the Government at least three of whom shall be from amongst persons who, in the opinion of the Government, have had experience and shown capacity in the field of finance, banking, trade, commerce, industry or agriculture.
11. 9[(1) The Managing Director shall be appointed by the Government in consultation with Bangladesh Bank, on such terms and conditions as the Government may determine.]

(2) The Managing Director shall-

(a) be a whole-time officer and the chief executive of the bank;

(b) exercise such powers, perform such functions and discharge such duties as may be entrusted by the Government or as may be prescribed or as may be assigned by the Board from time to time.

10[(3) The Government, in consultation with the Bangladesh bank, may remove the Managing Director from his office, if he –

(a) becomes incapable of performing his duties; or

(b) has done any act which is manifestly detrimental to the interest of the bank; or

(c) is or at any time has been convicted of an offence which, in the opinion of the Government, is an offence involving moral turpitude; or

(d) has been sentenced by a Court for a term of imprisonment exceeding one year; or

(e) found to be a lunatic or of unsound mind; or

(f) is or at any time has been adjudicated insolvent; or

(g) has defaulted in payment of dues of banks and financial institutions; or

(h) absents himself from three consecutive meetings of the Board without leave of absence granted by the Chairman.]

11[11A. 12[(1) The Government may appoint one or more Deputy Managing Directors for each new bank in consultation with Bangladesh Bank, on such terms and conditions as it may determine and may transfer a Deputy Managing Director of a new bank as the Deputy Managing Director of any other new bank.]

(2) The Deputy Managing Director shall-

(a) be a whole-time officer of the new bank;

(b) exercise such powers, perform such functions and discharge such duties as may be entrusted by the Government or as may be prescribed or as may be assigned by the Board from time to time.]

13[(3) The Government, in consultation with Bangladesh Bank, may remove any Deputy Managing Director from his office if he becomes incapable of performing his duties, or has done any act which is manifestly detrimental to the interest of the bank.]

14[12. (1) Subject to other provisions of this Order, a Director, other than the Managing Director, shall hold office for a term of three years and shall be eligible for re-appointment.

(2) The authority which appointed a Director may at any time remove him from office without assigning any reason and appoint in his stead another person to fill the vacancy.]

13. No person shall be, or shall continue to be a Director who-

(a) is or at any time has been convicted of an offence which, in the opinion of the Government, is an offence involving moral turpitude; or

15[(aa) has been sentenced by a court for a term of imprisonment exceeding one year; or]

(b) is a minor;

(c) is found to be a lunatic or of unsound mind;

(d) is or at any time has been adjudicated insolvent; or

(e) absents himself from three consecutive meetings of the Board without leave of absence granted by the Chairman or, in the case of the Chairman, by the Government 16[;

(f) has defaulted in payment of dues of banks and financial institutions.]

14. (1) If a Director becomes subject to any of the disqualifications specified in Article 13, he shall be deemed to have vacated his office as such and thereupon his office shall become vacant.

(2) A Director may resign his office by giving notice thereof in writing to the Government and on such resignation being accepted by the Government shall be deemed to have vacated his office.

(3) Where any vacancy occurs in the office of a Director, it shall be filled in accordance with Article 10.

15. A Director, other than the Managing Director, shall be paid such fees for attending the meetings of the Board or of any committee of the Board as may be prescribed by regulation.

17[15A. (1) The Government shall appoint one of the Directors other than the Managing Director to be the Chairman of the Board.

(2) Subject to his continuing to hold office as a Director, the Chairman shall hold office as Chairman for the terms of his office as Director and shall be eligible for re-appointment.

(3) In the event of a casual vacancy in the office of the Chairman a successor shall be appointed by the Government from amongst the Directors for the unexpired term or for the period of absence, as the case may be, but the person so appointed shall not hold office beyond the date of expiry of the term of office of his predecessor.]

16. The Board may constitute from amongst its Directors such committees as it may deem necessary to assist it in the discharge of its functions.
17. (1) The meetings of the Board shall be held at such times and at such places as may be prescribed by regulations:

Provided that a meeting may also be otherwise convened by the Chairman when he so thinks fit and shall be convened if two or more Directors so request in writing addressed to the Chairman:

Provided further that a meeting of the Board shall be held at least once in every three months.

(2) To constitute a quorum at a meeting of the Board not less than three Directors shall be present.

(3) At a meeting of the Board each Director shall have one vote, and in the event of equality of votes the Chairman shall have a second or casting vote.

(4) No Director shall vote on any matter in which he is directly or indirectly interested.

(5) If for any reason the Chairman is unable to be present at a meeting of the Board, a Director authorised in writing by the chairman shall preside at the meeting.

18. Every Director shall, before entering upon his office, make a declaration of fidelity and secrecy in such form as may be prescribed.
19. (1) All acts done by the Managing Director of any new bank, acting in good faith, shall, notwithstanding any defect in his appointment or in the procedure, be valid.

(2) No act or proceeding of any Board shall be invalid merely on the ground of the existence of any vacancy in, or defect in, the constitution of such Board.

(3) All acts done by a person acting in good faith as a Director of any new bank shall be valid, notwithstanding that it may afterwards be discovered that his appointment was invalid by reason of any defect or disqualification or had terminated by virtue of any provision contained in any law for the time being in force:

Provided that nothing in this Article shall be deemed to give validity to any act by a Director after his appointment has been shown to be invalid or to have terminated.

 

20. (1) The Managing Director and every officer or other employee of any new bank shall be indemnified by such bank against all losses and expenses incurred by him in or in relation to the discharge of his duties except such as have been caused by his own wilful act or default.

(2) A Director of any new bank shall be responsible for any loss or expense caused to such bank by the insufficiency or deficiency of the value of, or title to, any property or security acquired or taken on behalf of such bank, or by the insolvency or wrongful act of any customer or debtor, or by anything done in or in relation to the execution of the duties of his office, unless such loss, expense, insufficiency or deficiency was due to any wilful act or default on the part of such Director.