UPDATE 2-Bangladesh to hold general election in December

(Adds background, details, reactions)

By Anis Ahmed and Nizam Ahmed

DHAKA, May 12 (Reuters) - Bangladesh will hold a parliamentary election in December and will start talks from May 22 with political parties about how the vote is to be held, the head of the interim government said on Monday.

"We are determined to hold a free, fair and credible election in the third week of December, for which the Election Commission will announce schedules at an appropriate time," Fakhruddin Ahmed said in a televised speech to the nation.

Fakhruddin, a former central bank chief, said the army-backed interim government would hand over power to democratically elected politicians.

"This will dispel any misgivings among the political parties about the time frame of the election," he said.

Two former prime ministers -- Sheikh Hasina of the Awami League and Begum Khaleda Zia of the Bangladesh Nationalist Party (BNP) -- are currently being held in separate buildings in a sprawling parliament compound since their arrests last year.

They were detained as part of a massive anti-corruption drive launched by Fakhruddin's government, in which around 170 top politicians have been held. Many of them have already been convicted and sentenced to various prison terms.

Hasina faces charges of extortion and corruption while Khaleda has been charged with graft.