BRPD Circular Letter No. 15: Restrictions for ensuring discipline in bank-company management

Banking Regulation and Policy Department
Bangladesh Bank
Head Office Dhaka.

BRPD Circular Letter No. 15 28 Baishakh 1429
Date: -----------------------
11 May 2022

Managing Director/Chief Executive Officer
All Scheduled Banks operating in Bangladesh.

Dear Sir,

Subject: Regarding certain restrictions to ensure discipline in the management and operation of bank-companies.

To avoid conflicts of interest and ensure neutrality, professional standards, and good governance in the management and operation of bank-companies, Section 23(1)(a) of the Bank Company Act, 1991, imposes a restriction that a person who is a director of a bank-company shall not simultaneously be a director of any other bank-company or financial institution or insurance company. Similarly, to ensure discipline and good governance in the operation of bank-companies, certain restrictions were imposed through BRPD Circular Letter No. 27 dated May 12, 2021.

2. Furthermore, for the proper conduct of banking activities, it is essential for the bank's Board of Directors and management to play their respective roles appropriately, and therefore, it is desirable to avoid obstacles to ensuring discipline in bank operation and management. Now, to ensure greater discipline and good governance in the management and operation of bank-companies, the following directives are being issued:

2.1. No person appointed as Chairman of the Board of Directors of a bank-company or Chairman of an auxiliary committee formed by the board members, such as the Executive Committee, Audit Committee, and Risk Management Committee, shall be included as Chairman/Director/Member of the Board of Directors or Governing Body, by whatever name called, of that bank-company's subsidiary company or any company/institution or foundation formed and managed with the financing of the bank-company.

2.2. If a person serves as a shareholder director or nominated/representative director or independent director of a bank-company for a minimum period of 01 year, after the expiry of that term or retirement or relief, that person shall never be appointed/engaged in any regular or contractual position of that bank.

3. As mentioned in paragraph 2.1, if any person is currently serving as Chairman/Director/Member of such an institution's Board of Directors/Governing Body, by whatever name called, that person must vacate the relevant position by resigning/being relieved by June 30, 2022, and the concerned bank must inform the Banking Regulation and Policy Department, Division-2, about the matter within 07 working days of the month immediately following the expiry of the aforementioned period.

4. As mentioned in paragraph 2.2, if any such appointment has been made in banks, the individual/individuals concerned must vacate the relevant position by resigning/being relieved by July 31, 2022, and the concerned bank must inform the Banking Regulation and Policy Department, Division-2, about the matter within 07 working days of the month immediately following the expiry of the aforementioned period.

5. The subject matter of this circular must be presented at the immediate next meeting of the Board of Directors following the issuance of this circular, and necessary actions must be taken in this regard.

6. These directives are issued under the powers conferred by Section 45 of the Bank Company Act, 1991.

Yours faithfully,
(Md. Ali Akbar Faraji)
General Manager
Phone: 9530095