BRPD Circular Letter No. 20: Restrictions for ensuring discipline in bank-company management

BRPD Circular Letter No. 20
Banking Regulation and Policy Department
Bangladesh Bank
Head Office
Dhaka.
BRPD Circular Letter No. 20 28 Jyestha 1429
Date: -----------------------
01 June 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 management and operation of bank-companies.
Attention is drawn to BRPD Circular Letter No. 15 dated 11 May 2022 on the above-mentioned subject.
02. In paragraph 2.1 of the aforementioned Circular Letter, instructions are issued to comply by 30 June 2022, imposing a prohibition on the Chairman of the Board of Directors of a bank or the person appointed as Chairman of the Board of Directors of other companies/institutions established under the authority of the bank, including subsidiaries, from being included as Chairman/Director/Member of the Board of Directors of such companies/institutions.
03. Since the bank company bears the profit-loss and associated risks of subsidiaries and other companies/institutions established under the bank's authority, there is an obligation to manage these companies/institutions with efficiency. Now, banks have been informed that following the instructions of the aforementioned Circular Letter, if the positions of Chairman/Director/Member serving in subsidiary companies and other companies/institutions of the bank are made vacant simultaneously, it may create a lack of experience and efficiency in the management of such institutions. Consequently, banks may face the risk of financial loss.
04. Therefore, considering the above, a grace period until 30 June 2023 has been provided for banks to make positions vacant through resignation/acceptance of resignation from the positions of Chairman/Director/Member serving on the Board of Directors of subsidiary companies and other companies/institutions established under the bank's authority, with the aim of building qualified successors/replacements for the bank.
05. In addition, other instructions mentioned in BRPD Circular Letter No. 15/2022 will remain unchanged.

Yours faithfully,
(Md. Ali Akbar Farazi)
Director (BRPD)
Phone: 9530095