BRPD Circular Letter No. 26: Restrictions for ensuring discipline in bank-company management

BRPD Circular Letter No. 26 Bangladesh Bank Head Office Motijheel, Dhaka-1000 Banking Regulation and Policy Department Bangladesh BRPD Circular Letter No. - 26 12 Shrabon 1430 Date: ----------------------- 27 July 2023 Managing Director/Chief Executive Officer All Scheduled Banks operating in Bangladesh Dear Sir, Regarding certain restrictions to ensure discipline in bank-company management and operations. Reference is drawn to BRPD Circular Letter No. 15 dated 11 May 2022 and BRPD Circular Letter No. 20 dated 01 June 2022 on the above subject.

2. In paragraph 2.1 of the aforementioned circular letters, it was directed that the person appointed as the Chairman of the Board of Directors or the Chairman of the Board of Directors of the Subsidiary Committee of the bank-company shall not be included as Chairman/Director/Member of the Board of Management or Governing Body, however it may be named, of any subsidiary company of the said bank-company or any company/institution/foundation established and managed under the authority of the bank-company. A deadline of 30 June 2023 was set for such persons currently holding such positions to vacate the position by resignating/accepting discharge.

3. It has now been informed from the banks that the subsidiary companies established abroad as exchange houses/money transfer operators/finance companies of the banks are required to follow the policies/restrictions imposed by the regulatory authorities of the respective countries in the field of their operations. At present, due to the ongoing war situation in the world, exchange houses/money transfer operators/finance companies operating abroad are facing many more challenges than before in the field of operations such as remittance collection. For this reason, due to lack of adequate experience and expertise in dealing with operational risks, the operations of foreign subsidiaries may become highly risky/challenging; which may cause the possibility of financial loss to the bank and may have a negative impact on the reputation of the respective bank. It is also known that proper planning is required for the management of the foundation established and managed under the authority of the bank-company for the proper use of the allocated funds, which must be consistent with the income-expenditure, objectives and purposes of the respective bank.

4. Considering the above matters, in order to ensure proper management and operation of the exchange house/money transfer operator/finance company of the bank established abroad, the directions mentioned in paragraph 2.1 of BRPD Circular Letter No. 15/2022 shall not be applicable to the Board of Management/Governing Body of the said institutions/companies operated as subsidiaries of the bank abroad, however they may be named, and the foundation established and managed under the authority of the bank. However, the directions of BRPD Circular Letter No. 15/2022 shall be applicable in the case of inclusion as Chairman/Director/Member of other subsidiary institutions.

5. In addition, the other directions mentioned in BRPD Circular Letter No. 15/2022 shall remain unchanged.

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

Yours faithfully, (Md. Harun-Or-Rashid) Director (BRPD) Phone-9530095