Regulatory Alerts2022-06-01
Added
BRPD Circular Letter No. 20: Restrictions for ensuring discipline in bank-company management
The document extends the deadline for compliance with BRPD Circular Letter No. 15/2022 regarding restrictions on board members of banks and their subsidiaries from June 30, 2022, to June 30, 2023. This extension allows scheduled banks in Bangladesh time to identify and appoint qualified successors for Chairman, Director, or Member positions, thereby preventing operational disruptions and potential financial losses. All other instructions contained in the original circular remain unchanged.
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