BRPD Circular No. 12: Regarding involvement of bank directors and their related organizations in the procurement activities of goods, services etc of bank company

BRPD Circular No. 12: Regarding involvement of bank directors and their related organizations in the procurement activities of goods, services etc of bank company

Banking Regulation and Policy Department Bangladesh Bank Head Office Dhaka.

BRPD Circular No. - 12 01 Ashar 1429 Date: ----------------------- 15 June 2022

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

Dear Sir,

Context regarding the involvement of bank directors and organizations related to directors in the procurement and purchase/acquisition activities of goods, services, etc. of the bank company.

1. In order to avoid conflict of interest and ensure good governance in the operation of bank companies, instructions were issued through BRPD Circular No. 02 dated 21 January 2021, pursuant to the provisions of Section 18(2) of the Bank Company Act, 1991, for the submission of annual statements declaring their own and family business interests by each director, managing director, and lower-level officers of the bank company.

2. Recently, Bangladesh Bank has been informed that in some banks, directors or organizations related to directors are participating in the procurement and purchase/acquisition activities for goods, services, etc. required by the bank, in violation of the provisions regarding avoidance of conflict of interest and ensuring equality of individual interests of each customer stipulated in sub-sections (7) and (8) of Section 18 of the Bank Company Act, 1991. This is creating internal problems in establishing good governance in the bank.

3. Now, in order to avoid conflict of interest in the operation of bank companies and to give priority to the interests of depositors and other customers, as well as the bank company, this office is issuing instructions that no director of the bank or any organization related to the director may be involved in any activity related to the purchase and acquisition or procurement of goods, services, etc. of the bank.

4. To ensure compliance with the above-mentioned instructions, the subject matter of this circular must be presented at the next Board of Directors meeting immediately after the issuance of this circular, and necessary actions must be taken regarding this matter.

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

Yours faithfully,

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