BRPD Circular No. 02: Policy Regarding Establishment of Banks’ Business Centers & Their Rent/Lease Related Issues

Bangladesh Bank Chief Executive Office Motijheel, Dhaka-1000 Bangladesh. Ref No.: BRPD-Reg & Policy Banking Regulation and Policy Department BRPD Circular No. 02 Date: To: Managing Director/Chief Executive All Scheduled Banks operating in Bangladesh.

Dear Sir, Policy Regarding Establishment of Banks’ Business Centers & Their Rent/Lease Related Issues.

Reference is invited to BRPD Circular No. 18/2012 and BRPD Circular Letters No. 7/2013, 2/2015, 9/2016, 28/2018, 1/2019, and 28/2019 on the subject cited above.

Through the aforementioned circulars and circular letters, policies/instructions regarding the establishment of business centers of scheduled banks have been issued from time to time. In order to expand banking business in Bangladesh, provide banking services to the unbanked population, and achieve greater financial inclusion, the existing policies regarding the establishment, relocation, and renewal of lease agreements for business centers of scheduled banks operating in Bangladesh, as well as evening banking, are hereby replaced as follows:

1.0 Establishment of New Branches: 1.1 Policy Approval: The annual plan for the establishment of new branches by banks, along with a copy of the minutes of the meeting of the Board of Directors where the decision was taken, must be submitted to Bangladesh Bank for policy approval by mid-November of the year immediately preceding the year in which the new branch is to be established. Bangladesh Bank will grant policy approval for the establishment of a specified number of branches after reviewing the bank's financial capacity, credit quality, branch management, service delivery to depositors, and other relevant matters. 1.2 Branch License: For the license to establish a new branch, an application must be submitted to Bangladesh Bank by mid-November of the relevant year, along with a copy of the minutes of the meeting of the Board of Directors stating the purpose and commercial viability of the policy-approved branch establishment, according to the prescribed format (Annexure 'A'). If the licensed branch is not established within the stipulated time, the said license shall be deemed cancelled. 1.3 SME/Agriculture Branches: Among the policy-approved branches, an application can be made to establish any branch as an SME/Agriculture branch, along with a copy of the minutes of the meeting of the Board of Directors and according to the prescribed format (Annexure 'A'). SME/Agriculture branches must be established outside the Divisional City/City Corporation areas, with priority given to banking service-deprived areas. All banking activities, except foreign currency transactions, may be conducted in such branches. At least 50% of the deposited funds in such branches must be lent/invested in the SME/Agriculture sector within the area under the jurisdiction of that branch.

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-02- 1.4 Urban and Rural Branches: a) Branches established/being established in all City Corporations and 'A' class Municipality areas shall be considered "Urban Branches," and branches established/being established in other areas shall be considered "Rural Branches"; b) The number of Rural Branches shall be at least 50% of the total policy-approved branches; c) More than one Urban Branch shall not be established in any city on an annual basis; d) If any area is newly declared as a City Corporation area or included in an existing City Corporation, or if any existing 'B'/'C' class Municipality is upgraded to an 'A' class Municipality, the bank branch located there must immediately inform the Banking Regulation and Policy Department (Division-1) that it shall be considered an Urban Branch.

2.0 Establishment of Sub-branches: Banks shall prepare an annual plan for the expansion of new sub-branches and submit the application to Bangladesh Bank by mid-November of the year immediately preceding the year in which new sub-branches are to be established, along with a copy of the minutes of the meeting of the Board of Directors/Executive Committee. An application must be submitted to Bangladesh Bank for prior approval for the establishment of sub-branches according to the prescribed format (Annexure 'B'), along with a copy of the minutes of the meeting of the Board of Directors/Executive Committee. The following percentages must be followed in the establishment of sub-branches: 2.1 To ensure the financial inclusion of the public in banking service-deprived areas, at least 60% of the total approved sub-branches must be established outside City Corporations and 'A' class Municipality areas; 2.2 The original license of the sub-branch or its certified copy must be displayed in a place easily visible at the sub-branch; 2.3 Sub-branches shall be operated under the control of the nearby full-fledged branch; 2.4 Signboards displaying the bank's name, the name of the controlling branch, and the name of the sub-branch granted by the bank must be installed at a place easily visible outside the sub-branch; 2.5 Sub-branches shall not be established within a distance of 1.0 kilometer from the controlling branch. However, if there is a need to establish a sub-branch for any specific community or special area/region under financial inclusion, Bangladesh Bank may grant exemption from this percentage at its discretion; 2.6 The overall transactions of the sub-branch shall be included in the Books of Accounts of the controlling branch; 2.7 The floor space of the sub-branch shall be maximum 1000 square feet; 2.8 At least 2 staff members must be posted to operate the sub-branch properly; 2.9 The fees, charges, and commissions applicable for services provided/issued at regular bank branches shall also apply to services provided/issued at sub-branches; 2.10 Cash-in-transit and cash-on-counter re-insurance coverage must be ensured for sub-branches. Vaults may be established at sub-branches for the preservation of cash and valuable documents. The vault of the sub-branch shall be considered the vault of the controlling branch. In this regard, the security of the vault and insurance coverage of preserved funds must be ensured according to prevailing rules; 2.11 No foreign trade-related activities shall be conducted at sub-branches.

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-03- 3.0 Establishment of Booths: 3.1 Collection Booths: An application must be submitted to Bangladesh Bank for prior approval for the establishment of collection booths, along with a copy of the minutes of the meeting of the Board of Directors/Executive Committee and according to the prescribed format (Annexure 'B'). Each booth shall be operated under the control of the nearby branch. Only government revenue collection, utility bill collection, demand note fees, various hospital bills, tuition fees of students, and collection of fees deposited by recognized institutions/organizations may be conducted at collection booths. 3.2 Electronic Booths: Prior approval from Bangladesh Bank is not required for the establishment of any type of electronic booth, including ATMs. However, the following policies must be followed in this regard: a) The bank's Board of Directors/Executive Committee must approve the establishment of electronic booths, and Bangladesh Bank must be informed within 15 days of the establishment of the booth according to the prescribed format (Annexure 'B'). b) Considering the convenience of customers, a space of maximum 100 square feet may be rented for the installation of a single ATM/CDM at each booth, and proportional rent may be charged for the installation of multiple ATMs/CDMs. c) Arrangements must be made following the rules applicable to branches regarding the expenses and rent related to the establishment of such booths. d) No banking transactions other than electronic transactions shall be conducted at such booths. e) If any irregularity is observed in the inspection conducted by Bangladesh Bank regarding the aforementioned matters, appropriate arrangements will be made.

4.0 Establishment of Business Development Centers: For the establishment of any type of Business Development Center (Divisional Office/Sub-office/Regional Office/Business Development Center/Unit Office/Customer Service Center/SME Center/Call Center/Airport Lounge, etc., however named), an application must be submitted to Bangladesh Bank for prior approval, along with a copy of the minutes of the meeting of the Board of Directors/Executive Committee and according to the prescribed format (Annexure 'B'). No banking transactions shall be conducted at such establishments.

5.0 Relocation of Business Centers: 5.1 If there is a need to relocate a business center, an application must be submitted to Bangladesh Bank for prior approval at least 3 months before the expiry of the current lease agreement or the expected relocation date, along with a copy of the minutes of the meeting of the Board of Directors for branches, and the Board of Directors/Executive Committee for areas other than branches, and according to the prescribed format (Annexure 'C'). 5.2 If there is a need to relocate a business center, the relocation must be carried out within 6 months from the date of obtaining the license for relocation; otherwise, the license shall be deemed cancelled. 5.3 In the case of branch relocation, an application must be submitted to Bangladesh Bank for correction by returning the original license of the branch within 15 days of the relocation.

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-04- 6.0 Merger/Conversion/Closure of Business Centers: 6.1 With the decision of the bank's Board of Directors/Executive Committee and subject to prior approval from Bangladesh Bank, any business center may be merged with a nearby business center if necessary. The same procedure must be followed if the type of any business center is changed. 6.2 If there is a need to close any business center, an application must be submitted to Bangladesh Bank for prior approval, along with a copy of the minutes of the meeting of the Board of Directors for branches, and the Board of Directors/Executive Committee for areas other than branches, stating the specific reasons for the closure. 6.3 The application for merger/conversion/closure of business centers must be submitted at least 3 months before the prescribed or expected time.

7.0 Acquisition and Renewal of Building Rent/Lease: For the acquisition and renewal of building rent/lease of any type, an application must be submitted to Bangladesh Bank for prior approval, along with a copy of the minutes of the meeting of the Board of Directors/Executive Committee and according to the prescribed format (Annexure 'D'). The following matters must be followed in the case of building rent/lease: 7.1 Considering cost savings and other facilities in the case of long-term contracts, building/floor space rent/lease may be acquired for a maximum period of 20 years. 7.2 Considering the bank's business area and scope, customer count, manpower, etc., the area of Urban and Rural branches shall be maximum 6,000 square feet and 3,000 square feet, respectively. However, if an application is made to Bangladesh Bank demonstrating reasonable reasons along with actual evidence in the case of a relatively increased operation of existing Principal Branches and Corporate Branches, the decision given by Bangladesh Bank considering the actual situation shall be considered final. 7.3 The rent shall not be increased by more than 15% of the main rent at intervals of minimum 3 years within the same lease agreement period. 7.4 More than one advance payment shall not be made within the same lease agreement period, and the following instructions shall be followed in the case of advance payment:

Serial No.	Lease Agreement Period	Advance Payment (Maximum)
1	Up to 4 years	Equivalent to 12 months' rent
2	More than 4 years but less than 9 years	Equivalent to 24 months' rent
3	9 years or more	Equivalent to 36 months' rent

7.5 In the case of long-term contracts for the bank's building rent/lease, if Bangladesh Bank's approval is obtained once, there is no need to obtain new approval from Bangladesh Bank for the renewal/renewal of lease agreements for a period of 3 years or more in the future, provided the rent increase rate remains within 15%. However, if the bank's Board of Directors/Executive Committee decides to renew such lease agreements, the matter must be informed to the Banking Regulation and Policy Department of Bangladesh Bank within 15 days immediately after the decision is taken.

8.0 Establishment/Relocation Costs of Business Centers: 8.1 In the case of establishing new business centers, a maximum cost of 2,000/- Taka per square foot may be incurred for items other than IT equipment and air conditioning equipment, and a maximum cost of 1,400/- Taka per square foot may be incurred for the relocation of existing business centers. The cost of IT equipment and air conditioning arrangements must also be reasonable. 8.2 In the case of establishing or relocating business centers, equipment for decoration must be selected keeping in mind medical requirements, quality standards, and sustainability. Selection of environmentally friendly equipment for decoration shall be considered a priority. 8.3 In the case of establishing or relocating business centers, banks shall construct vaults at their own cost at business centers (where applicable) by procuring furniture and equipment following the mentioned cost limits. If necessary, banks shall remove previously established vaults at their own cost and expense during the relocation of business centers, and such expenses shall remain outside the approved cost limit for the relocation of business centers. 8.4 To ensure uninterrupted electricity supply at the bank's business centers, priority shall be given to installing solar power systems (Solar Power System) alongside the national grid electricity supply arrangement. The installation cost of such solar power systems shall remain outside the cost limit mentioned in Section 8.1. 8.5 In the case of incurring the mentioned expenses, the approval of the bank's Board of Directors/Executive Committee must necessarily be obtained.

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-05- 9.0 General Instructions in the Case of Acquisition of Building Rent/Lease: Before acquiring building/floor space rent/lease for the establishment of any type of business center of the bank, it must be ensured that the building has obtained legal approval from the relevant authority. In addition, it must be ensured that the structural strength of the building is determined by the bank's own engineer and that necessary preparatory arrangements are in place to cope with immediate disasters. Furthermore, to ensure the security of the building/floor space of the bank's existing business centers and to take all necessary preparatory measures to cope with potential disasters, inspection programs must be conducted from time to time by an internal inspection team formed by the bank's competent/expert engineers.

10.0 Details of Building Rent: By January 15 of each year, the details of the building/floor space rent of the bank's business centers (branches and sub-branches) based on December 31 of the immediately preceding year must be sent to the Banking Regulation and Policy Department (Division-1) via soft copy by e-mail (brpd@bb.org.bd) according to the prescribed format (Annexure 'E').

11.0 Evening Banking: An application must be submitted to Bangladesh Bank for prior approval for the operation of evening banking programs after office hours, along with a copy of the minutes of the meeting of the Board of Directors/Executive Committee and according to the prescribed format (Annexure 'F'). The evening banking schedule shall be 02 hours after the bank's office hours, and no banking transactions other than deposit collection shall be conducted during this time.

12.0 BRPD Circular No. 18/2012 and BRPD Circular Letters No. 7/2013, 2/2015, 9/2016, 28/2018, 1/2019, and 28/2019 are hereby repealed. Notwithstanding this, programs taken under the purview of the aforementioned circulars and circular letters shall remain valid as usual.

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

14.0 These instructions shall come into force immediately.

Yours faithfully, (Maksuda Begum) Director (BRPD) Phone: 9530252

Annexure 'A' Information Regarding Establishment of New Branches.

1. Name of the Bank Company:

2. Number of existing business centers: Location of Business Centers | Branch | Sub-branch | Collection Booth | Electronic Booth --- | --- | --- | --- | --- Urban Rural Total

3. Name of the proposed branch (mentioning Urban/Rural):

4. Full address of the proposed branch (according to the following table):

City Corporation/Municipality Area	Other Areas
Name of Building (if any)	Name of Building (if any)
Holding Number	Village/Area
Road Number (if any)	Dag Number
Name of Road (if any)	Khatian Number
Ward Number	Mouza Name
City Corporation/Municipality (with Class)	Union
Thana	Thana
District	District

5. Approximate jurisdiction area (in kilometers), population, and commercial importance of the area under the proposed branch:
6. Deposit collection and loan distribution targets within 12 months of branch opening (in Crore Taka):
7. Information about other bank branches/sub-branches established in the area under jurisdiction (according to the following table):

Serial No.	Name of Bank and Branch/Sub-branch	Distance from Proposed Branch	Monthly Rent Rate (Taka/Sq. Ft.)	Lease Agreement Period

8. Is the proposed building suitable for establishing a branch?
9. Is there any involvement of any director of the bank with the ownership of the selected building? If yes, detailed information:
10. Details of building rent for the proposed branch (according to the following table):

Floor Space Area (Sq. Ft.)	Monthly Rent (Taka/Sq. Ft.)	Rent Increase Rate in Contract Period	Service Charge (if any)	Other Charges	Amount of Advance	Lease Agreement Period

11. Possible cost of establishing the proposed branch (according to the following table): a) Possible cost for items other than IT equipment and air conditioning equipment (in Taka):

Serial No.	Head of Expense	Amount of Expense	Remarks

b) Possible cost for IT equipment and air conditioning equipment (in Taka):

Serial No.	Head of Expense	Amount of Expense	Remarks

c) Total amount of expense (a+b): 12. Possible manpower for the proposed branch: 13. Details of security measures taken regarding the proposed branch (Security Guard/Armored Guard, CCTV, etc.) (Signature, Name, Phone Number, and Seal of the Regional Head)

Annexure 'B' Information Regarding Establishment of Business Centers (Sub-branch/Booth/Business Development Center).

1. Name of the Bank Company:

2. Number of existing business centers: Location of Business Centers | Branch | Sub-branch | Collection Booth | Electronic Booth --- | --- | --- | --- | --- Urban Rural Total

3. Name of the proposed business center:

4. Full address of the proposed business center (according to the following table):

City Corporation/Municipality Area	Other Areas
Name of Building (if any)	Name of Building (if any)
Holding Number	Village/Area
Road Number (if any)	Dag Number
Name of Road (if any)	Khatian Number
Ward Number	Mouza Name
City Corporation/Municipality (with Class)	Union
Thana	Thana
District	District

5. Name and distance of the controlling branch:
6. Purpose of establishing the proposed business center (mentioning commercial importance of the area):
7. Is there any involvement of any director of the bank with the ownership of the selected building? If yes, detailed information:
8. Is the proposed building suitable for establishing a business center?
9. Information about other bank branches/sub-branches established in the area under jurisdiction (according to the following table):

Serial No.	Name of Bank and Branch/Sub-branch	Distance from Proposed Sub-branch	Monthly Rent Rate (Taka/Sq. Ft.)	Lease Agreement Period

10. Details of building rent for the proposed business center (according to the following table):

Floor Space Area (Sq. Ft.)	Monthly Rent (Taka/Sq. Ft.)	Rent Increase Rate in Contract Period	Service Charge (if any)	Other Charges	Amount of Advance	Lease Agreement Period

11. Possible cost of establishing the proposed business center (according to the following table): a) Possible cost for items other than IT equipment and air conditioning equipment (in Taka):

Serial No.	Head of Expense	Amount of Expense	Remarks

b) Possible cost for IT equipment and air conditioning equipment (in Taka):

Serial No.	Head of Expense	Amount of Expense	Remarks

c) Total amount of expense (a+b): 12. Possible manpower for the proposed business center: 13. Details of security measures taken regarding the proposed business center (Security Guard/Armored Guard, CCTV, etc.) (Signature, Name, Phone Number, and Seal of the Regional Head)

Annexure 'C' Information Regarding Relocation of Business Centers.

1. Name of the Bank Company:
2. License Number and Date of Business Center:
3. Name of Business Center (mentioning Urban/Rural in the case of a branch):
4. Full address of Business Center (according to the following table):

City Corporation/Municipality Area	Other Areas	Current Proposed
Name of Building (if any)	Name of Building (if any)
Holding Number	Village/Area
Road Number (if any)	Dag Number
Name of Road (if any)	Khatian Number
Ward Number	Mouza Name
City Corporation/Municipality (with Class)	Union
Thana	Thana
District	District

5. Distance from current building to proposed building:
6. Is there any involvement of any director of the bank with the ownership of the selected building? If yes, detailed information:
7. Is the selected building suitable for establishing a business center?
8. Information about other bank branches/sub-branches established in the area under jurisdiction (according to the following table):

Serial No.	Name of Bank and Branch/Sub-branch	Distance from Proposed Business Center	Monthly Rent Rate (Taka/Sq. Ft.)	Lease Agreement Period

9. Details of building rent for the proposed business center:

Serial No.	Rent-related Heads	Current	Proposed
9.1	Floor Space Area (Sq. Ft.)
9.2	Monthly Rent (Taka/Sq. Ft.)
9.3	Rent Increase Rate in Contract Period
9.4	Amount of Advance
9.5	Service Charge (if any)
9.6	Other Charges
9.7	Lease Period

10. Possible cost of relocating the business center (according to the following table): a) Possible cost for items other than IT equipment and air conditioning equipment (in Taka):

Serial No.	Head of Expense	Amount of Expense	Remarks

b) Possible cost for IT equipment and air conditioning equipment (in Taka):

Serial No.	Head of Expense	Amount of Expense	Remarks

c) Total amount of expense (a+b): 11. Reason for relocating the business center: 12. Details of security measures taken (Security Guard/Armored Guard, CCTV, etc.) (Signature, Name, Phone Number, and Seal of the Regional Head)

Annexure 'D' Information Regarding Acquisition and Renewal of Building Rent/Lease.

1. Name of the Bank Company:
2. Purpose of acquiring building/floor space rent:
3. Address of the proposed building for rent (according to the following table):

City Corporation/Municipality Area	Other Areas
Name of Building (if any)	Name of Building (if any)
Holding Number	Village/Area
Road Number (if any)	Dag Number
Name of Road (if any)	Khatian Number
Ward Number	Mouza Name
City Corporation/Municipality	Union
Thana	Thana
District	District

4. Is there any involvement of any director of the bank with the ownership of the selected floor space? If yes, detailed information:
5. Information about other bank branches/sub-branches established in the area under jurisdiction (according to the following table):

Serial No.	Name of Bank and Branch/Sub-branch	Distance from Proposed Building	Monthly Rent Rate (Taka/Sq. Ft.)	Lease Agreement Period

6. Details of rent for the proposed floor space (according to the following table):

Serial No.	Rent-related Heads	Current (if applicable)	Proposed
6.1	Floor Space Area (Sq. Ft.)
6.2	Monthly Rent (Taka/Sq. Ft.)
6.3	Rent Increase Rate in Contract Period
6.4	Amount of Advance
6.5	Service Charge (if any)
6.6	Other Charges
6.7	Lease Period

7. Other information (if any): (Signature, Name, Phone Number, and Seal of the Regional Head)

Annexure 'E' Annual Rent Details of Business Centers (Branches/Sub-branches) as of December 31, 20..

Name of Bank: Address of Bank:

S. No.	Name of Business Center	Class of Business Center (Head Office, Principal, Corporate, Branch, Sub-branch, Booth, Collection Booth)	Area (Sq. Ft.)	Monthly Rent (Taka/Sq. Ft.)	Total Monthly Rent (Taka)	Advance Amount (Taka)	Lease Period	Rent Increase Rate in Contract Period	Service Charge (if any)	Other Charges	Total Rent Paid	Advance Paid	Total Expense (Rent + Other)	Remarks

Remarks:

1. Please mention the name of the bank and the address of the head office.
2. Please mention the class of the business center (Head Office, Principal, Corporate, Branch, Sub-branch, Booth, Collection Booth).
3. Note: 12
4. Note: 2
5. Total Rent and Other Expenses: Sum of Total Rent and Total Other Expenses.

Annexure 'F' Information Regarding Evening Banking

1. Name of the Bank Company:
2. Name of the Branch, License Number, and Date:
3. Necessity for Evening Banking:
4. Number of potential depositors and total deposit amount for evening banking daily:
5. Vault limit and insurance coverage amount of the branch:
6. Vault limit and insurance coverage amount for evening banking:
7. Names and distances of bank branches in the area where evening banking is currently running:
8. Amount of additional monthly expenses for evening banking:
9. Details of security measures taken (Security Guard/Armored Guard, CCTV, etc.) (Signature, Name, Phone Number, and Seal of the Regional Head)