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

Ref No: BRPD Circular Letter No. 15 Banking Regulation and Policy Department Bangladesh Bank Head Office Dhaka.

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

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

Dear Sir,

Regarding certain prohibitions in the context of ensuring discipline in the operation and management of bank-companies.

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

2. However, it is necessary for the Board of Directors of the bank and management to play their respective roles appropriately for the smooth conduct of banking activities. Therefore, it is desirable to remove obstacles created in ensuring discipline in bank operation and management. Now, in order to ensure greater discipline and good governance in the operation and management of bank-companies, the following instructions are issued:

2.1. Any person appointed as Chairman of the Board of Directors or as Chairman of any Board Committee formed by the Board Members of a bank-company, such as the Nominating Committee, Audit Committee, and Risk Management Committee, shall not be able to join as Chairman/Director/Member of the Board of Directors or Governing Body, however named, of any subsidiary company of the said bank-company or any company/institution/foundation formed and operated under the authorization of the bank company.

2.2. If a person serves as a Shareholder Director, Nominee/Representative Director, or Independent Director of a bank-company for a minimum period of 01 year, such person shall never be employed/appointed in any regular or contractual position of that bank after the expiration of such period or retirement/resignation.

3. As mentioned in Section 2.1, if any person is serving as Chairman/Director/Member of the Board of Directors/Governing Body of such an institution, however named, such person must vacate the respective position by resigning/withdrawing from the position by 30 June 2022, and the concerned bank must inform the Banking Regulation and Policy Department, Division-2 within 07 working days of the month immediately following the expiration of the specified time.

4. As mentioned in Section 2.2, if any such employment has been provided in banks, the concerned person(s) must vacate the respective position by resigning/withdrawing from the position by 31 July 2022, and the concerned bank must inform the Banking Regulation and Policy Department, Division-2 within 07 working days of the month immediately following the expiration of the specified time.

5. Immediately after the issuance of this circular, the subject matter of the circular must be presented at the meeting of the Board of Directors, and necessary actions must be taken regarding this.

6. These instructions are issued under the powers granted in Section 45 of the Bank Companies Act, 1991.

Yours faithfully,

(Md. Ali Akbar Farazi) Deputy General Manager Phone: 9530095