Regulatory Alerts2022-12-21
Added
DFIM Circular Letter No. 26: Reduction of vehicle expenses and usage in NBFI's
The Department of Financial Institutions and Markets of Bangladesh Bank mandates that all financial institutions replace vehicles only after a minimum usage period of eight years, increasing the previous five-year threshold. A ban on the purchase of any motor vehicles (new or replacement) for official use is imposed for the 2022-23 fiscal year. Additionally, the Chief Executive Officer is prohibited from using multiple official vehicles, employees receiving vehicle loans or maintenance allowances are barred from using institutional vehicles, and fuel expenses must be reimbursed strictly based on actual costs with proper vouchers retained. These directives are issued under Section 18(c) of the Financial Institutions Act, 1993, and take immediate effect.
Department of Financial Institutions and Markets Bangladesh Bank Head Office Dhaka. Ref No: DFIM/Regulatory/26 DFIM Circular Letter No.-26 Managing Director/Chief Executive Officer All Financial Institutions operating in Bangladesh.
Dear Sir,
Regarding the reduction of motor vehicle purchase, usage, and operational expenses of financial institutions.
Reference is invited to Circular Letter No. 12 of this department dated 18 November 2015 on the above-mentioned subject.
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In order to avoid high operational costs in the use of vehicles by financial institutions and deposit-taking financial institutions in the interest of the institutions and depositors, instructions were provided in sub-paragraph 1(b) of the aforementioned circular that all vehicles of a financial institution would be replaceable after a minimum usage of 5 (five) years. Now, in coordination with the Government Order regarding the lifespan of vehicles being 8 (eight) years, instructions are hereby provided that all vehicles of a financial institution would be replaceable after a minimum usage of 8 (eight) years.
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It is mentioned that in the context of the current economic situation, in coordination with the Government's decision to suspend/reduce operational/development expenses, the purchase of any type of vehicle (new/replacement) for official expenses of financial institutions will be banned during the 2022-23 fiscal year.
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Furthermore, in order to remove other inconsistencies regarding the use of cars in official expenses and to reduce operational expenses, the following instructions are provided:
(a) The Chief Executive Officer of the financial institution will not be provided the facility of using multiple cars in the institution's expenses;
(b) Employees who receive loans for cars and maintenance allowances from the institution will not be able to use the institution's cars; and
(c) Motor vehicle-related fuel expenses will be reimbursed only according to the approved limit based on actual expenses. Proof/vouchers of such expenses must be preserved properly.
- Other instructions mentioned in DFIM Circular Letter No. 12/2015 will remain in force.
This order is issued under the powers conferred by Section 18(c) of the Financial Institutions Act, 1993, and will take immediate effect.
Yours faithfully,
(Md. Amir Uddin) Director (DFIM) Phone: 9530178
Date: 21 December 2022