DFIM Circular No. 02: Regarding the policies related to establishment/expansion/relocation and rental/lease of finance companies' business centers

1
Bangladesh Bank
(Central Bank of Bangladesh)
Head Office
Motijheel, Dhaka-1000
Bangladesh.
Ref No.: DFIM Circular No. 02
Managing Director / Chief Executive Officer
All Finance Companies operating in Bangladesh.
Dear Sir,
Regarding the policies related to establishment/expansion/relocation and rental/lease of finance companies' business centers.
Section 6 of the Finance Companies Act, 2023 mentions the establishment of business centers, branches, or booths of finance companies and the relocation of existing business centers. Furthermore, various instructions regarding the establishment of business centers of finance companies have been issued from time to time through circulars and circular letters. To further enhance financial inclusion, the existing policies regarding the establishment, expansion, relocation, and rental/lease of buildings of business centers of finance companies operating in Bangladesh are hereby replaced as follows:

1. Establishment or Relocation of Head Office:
   Prior policy approval from Bangladesh Bank is required for the establishment or relocation of the Head Office of a finance company. After obtaining policy approval, an application must be submitted to Bangladesh Bank along with all information regarding the location and rental of the Head Office, and final approval must be obtained. A copy of the Board of Directors' resolution must be mandatorily attached with the application for policy approval or final approval.

2. Establishment of New Branches, Sub-branches, Booths, or Business Centers:
   2.1 Policy Approval:
   To establish or relocate business centers, branches, sub-branches, or booths of a finance company, the concerned finance company must apply to Bangladesh Bank for policy approval along with a copy of the Board of Directors' resolution. Bangladesh Bank will grant policy approval for the establishment of branches after reviewing the financial capacity, capital adequacy, classified loan ratio, findings of the best audit of the inspection department, CAMELS rating, customer service provision, and other relevant matters of the applying company.

2.2 Branch License:
After obtaining policy approval from Bangladesh Bank, an application must be submitted to Bangladesh Bank in accordance with the table/form-3 (Annexure 'A') specified under Section 7 of the Financial Institutions Ordinance, 1994, for the establishment and relocation of new branches by determining the location of the branch, and a license must be obtained. If the approved branch is not established or relocated within the specified period (within 03 months), the said approval letter will be considered void.

Date: 18 May 2025
Department of Financial Institutions and Markets
Page 2/2.2.1
The following information/documents must be submitted along with the application for the establishment of a branch:
a) Copy of the Board's approval for the establishment of the new branch; b) Audited financial statements of the concerned finance company for the last 3 years; c) Projection of potential income-expenditure for the proposed branch for 3 years; d) Declaration from the Chairman and Directors regarding the absence of conflict of interest in the item of expenditure for space rental and procurement of services/equipment for the establishment of the proposed branch; e) Declaration that none of the Chairman or Directors are NPA borrowers; f) Item-wise details of potential initial expenditure for the establishment of the proposed branch; g) Declaration that the Chairman or any Director of the concerned finance company is not under any liability under any provision of the Finance Companies Act, 2023; h) Draft rental agreement or memorandum of understanding for office space or building for the establishment of the proposed branch; i) Information/data or documents proving that the rent of the proposed office space or building is market-based (information regarding the rent of existing branches of nearby banks or finance companies must be submitted).

2.3 Ratio for Establishing New Branches in Dhaka and Outside Dhaka:
a) The annual ratio for opening new branches shall be 1:2, meaning for every one branch established in Dhaka, two branches must be established outside Dhaka; b) More than one city branch cannot be established in any city on an annual basis; c) The area of the branch shall be maximum 5000 square feet, and the initial expenditure for branch establishment (excluding IT equipment, interior decoration, office furniture, electric/electronics, etc.) shall be restricted to between 2,000/- Taka per square foot.

3. Establishment of Sub-branches:
   In areas where a finance company or its branch does not exist, customer service can be provided through low-cost 'sub-branches' established under existing branches for financial inclusion. For the establishment of sub-branches, an application must be submitted in the prescribed form (Annexure 'B') along with a copy of the Board of Directors' resolution, and prior approval from Bangladesh Bank must be obtained. If the approved sub-branch is not established within the specified period, the said approval letter will be considered void. The following conditions must be observed for the establishment of sub-branches:
   a) The proposed sub-branch shall be operated under one existing full-fledged branch and its area shall be maximum 1000 square feet; b) The activities of the proposed sub-branch shall be conducted in the public interest in accordance with the objectives mentioned in the Finance Companies Act, 2023 and the Memorandum of Association of the applying company; c) The business and economic activities of the area where the sub-branch is to be established must be suitable for the operation of the sub-branch, and it must be profitable based on the evaluation of potential income-expenditure; d) A sub-branch can be established under a branch only after the branch has been operating for 2 years, and more than 2 sub-branches cannot be established under one branch; e) Sub-branches must mandatorily be established outside urban areas to ensure financial inclusion; f) The distance between the sub-branch and the controlling branch shall be at least 10 km; g) All types of information and documents of the sub-branch shall be preserved at the controlling branch, and the manager of the controlling branch shall be responsible for the operation of that sub-branch; h) The controlling branch shall regularly supervise all activities of the sub-branch and inspect it at least twice a month; i) The overall activities of the sub-branch shall be included in the books of accounts of the controlling branch; j) At least 2 employees must be appointed for proper operation; k) Fees or charges applicable for services provided at the branch shall apply to services provided at the sub-branch; l) The initial expenditure for the establishment of the sub-branch (excluding IT equipment, interior decoration, office furniture, electric/electronics, etc.) shall be restricted to between 2000/- Taka per square foot; m) Security arrangements for the sub-branch shall be ensured; n) The office index applicable for the branch shall also apply to the sub-branch; o) A signboard containing the name of the finance company, the name of the controlling branch, and the name of the sub-branch shall be displayed at a place easily visible in front of the respective sub-branch; p) A list of services provided at the sub-branch shall be displayed in a visible place; q) Existing sub-branches cannot be relocated or closed without prior approval from Bangladesh Bank.

3.1 Activities of Sub-branches:
a) Loan/lease proposals can be received from customers, but no policy decisions can be taken; b) Standard customer services including loan/lease, investment, and other information exchange shall be ensured; c) Supervision of collection or payment of installments of distributed loans/leases from customers can be done; d) All types of information of customers of the sub-branch shall be preserved with the respective sub-branch and the controlling branch; e) Complaints from customers shall be received and arrangements for their quick resolution shall be made; f) No business/transaction not approved or prohibited under the Finance Companies Act, 2023 shall be conducted.

4. Establishment of Booths:
   For the establishment of any type of business development center (booth/business development center/customer service center/call center/SME center/sales office, etc.) of a finance company, an application must be submitted to Bangladesh Bank in the prescribed form (Annexure 'B') along with a copy of the Board's resolution for prior approval. Activities such as area-based customer service, providing advice, receiving and resolving complaints, and conducting programs related to human resource development of the institution can be conducted at such establishments. The area of such establishments shall be maximum 200 square feet, and the initial expenditure (excluding IT equipment, interior decoration, office furniture, electric/electronics, etc.) shall be restricted to between 2000/- Taka per square foot.

5. Relocation of Business Centers:
   If there is a need to relocate the Head Office (Head Office), branch, sub-branch, booth, or business development center, an application must be submitted to Bangladesh Bank for prior approval in the prescribed form (Annexure 'A') in accordance with the instructions specified under Section 7 of the Financial Institutions Ordinance, 1994 for branch relocation, and in the form specified in Annexure 'G' for the relocation of Head Office, sub-branch, booth, or business development center, along with a copy of the Board of Directors' resolution at least 3 months before the expiry of the current rental agreement or the expected relocation date. The initial expenditure for relocation (excluding IT equipment, interior decoration, office furniture, electric/electronics, etc.) shall be restricted to between 1400/- Taka per square foot.

6. Expansion of Business Centers (Head Office/Branch/Sub-branch/Booth):
   a) If the need for expansion of any business center (Head Office/Branch/Sub-branch/Booth) arises, an application must be submitted to Bangladesh Bank for prior approval in the prescribed form (Annexure 'D') along with a copy of the Board of Directors' resolution mentioning the specific reason for expansion; b) The expansion of the business center must be done in the same establishment. However, in special cases, if expansion in the same establishment is not possible for the Head Office, the said expansion can be done at the nearest distance (adjacent building); c) The initial expenditure for the expansion of the business center (Head Office/Branch/Sub-branch/Booth) (excluding IT equipment, interior decoration, office furniture, electric/electronics, etc.) shall be restricted to between 2000/- Taka per square foot.

7. Merger/Conversion/Closure of Business Centers:
   a) Business centers can be merged with nearby business centers as per the resolution of the Board of Directors of the finance company and with prior approval from Bangladesh Bank. The same procedure must be followed in case of changing the type of any business center; b) If the need for closing any business center arises, an application must be submitted to Bangladesh Bank for prior approval along with a copy of the Board of Directors' resolution mentioning the specific reason for closure; c) Along with such application, the reason for merger or closure, the plan for how existing customers will be served, and the plan for how existing manpower will be absorbed must be submitted; d) The application for merger/conversion/closure of business centers must be submitted at least 3 months before the prescribed or expected time.

8. Rental/Lease of Establishments and Renewal:
   The following matters shall be followed in the case of rental/lease of establishments:
   8.1 Considering cost savings and other facilities, building/floor space can be rented/leased for a maximum period of 20 years for long-term contracts;
   8.2 The main rent cannot be increased by more than 15% at an interval of at least 3 years within the same rental contract period. If the rent increase rate is more than 15%, approval from Bangladesh Bank must be obtained by applying in the prescribed form (Annexure 'E') along with the approval of the Board of Directors.
   8.3 More than one advance payment cannot be made within the same rental contract period, and the following instructions specified in the table shall be followed in the case of advance payment:

S.No.	Rental Contract Period	Advance Payment (Maximum)
1	Up to 4 years	Equivalent to 12 months rent
2	More than 4 years but less than 09 years	Equivalent to 24 months rent
3	9 years or more	Equivalent to 36 months rent

8.4 In the case of long-term contracts for rental/lease of establishments, if approval from Bangladesh Bank is obtained once, there is no need to obtain fresh approval from Bangladesh Bank for renewal/re-renewal of the rental contract for a period of 3 years or more in the subsequent period, provided the rent increase rate remains within 15%. However, in the case of renewal/re-renewal, the matter must be informed to the Department of Financial Institutions and Markets of Bangladesh Bank within 15 days immediately after the decision is taken by the Board of Directors of the finance company.
8.5 In the case of rental/lease of building/floor space for the establishment of any type of business center, proper compliance with the instructions specified in DFIM Circular No. 02/2013 must be ensured to comply with relevant laws and regulations, obtain approval from regulatory bodies, and ensure safety.
8.6 To ensure uninterrupted electricity supply at the business center, in addition to using national grid electricity, steps can be taken to install solar panels if necessary.

9. Details of Establishment Rent: The details of the rent of the business centers (branches, sub-branches, booths, head offices, etc.) of the financial institution based on December 31 of the immediately preceding year must be sent to the Department of Financial Institutions and Markets by January 15 of each year.

10. DFIM Circular No. 07/2010, Clause 2 of DFIM Circular No. 12/2015, DFIM Circular Letter No. 11/2014, DFIM Circular Letter No. 05/2019, DFIM Circular Letter No. 13/2019 are hereby repealed.

11. These instructions are issued under the powers conferred by Section 41 of the Finance Companies Act, 2023.

Yours faithfully,

(Gautam Kumar Ghosh)
Director (DFIM)
Phone: 9530178

Annexure 'A'
Form-3
[See Provision 7 of the Financial Institutions Ordinance, 1994] Application for Opening a New Branch or Relocating an Existing Branch Director, Department of Financial Institutions and Markets, Bangladesh Bank, Head Office, Dhaka. Dear Sir, I am applying to open a new branch or relocate an existing branch in accordance with Provision ... ... ... ... ... ... of the Financial Institutions Ordinance, 1994. For this purpose, the necessary information is provided below:

1. Name of the Financial Institution:
2. Number of existing branches:
3. Number of unprofitable branches:

Branch Name	Date of Opening	Loss Amount in Previous Year	Loans Taken	Loans Given

4. Details of the Proposed New Branch:
   a) Location:
   b) Justification for opening the branch:

• Total population of the area of operation or area of the proposed branch:
• Main business, commerce, and other economic activities of the said area (with statistics):
• Existing business facilities in the said area (location of branches of nearby other financial institutions):
• Potential for loan taking/giving in the 12 months after opening the branch:

5. Relocation of Existing Branch:
   a) Current Address:
   b) Proposed Address for Branch Relocation:
   c) Justification for Branch Relocation:

• Total population of the area of the relocated branch:
• Main business, commerce, and activities of the said area:
• Facilities of other existing businesses in the said area:
  (Location of branches of nearby other banks).

6. Capital Structure of the Financial Institution:

• Approved Capital:
• Paid-up Capital:

7. Initial Expenditure:
8. Other Information, if any:
   The information provided above is correct to the best of my knowledge and belief.
   (Signature of Managing Director/Chairman)

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

1. Name of Finance Company:
2. Number of existing business centers:

Location of Business Center	Branch	Sub-branch	Business Development Center/Booth
Dhaka City
Outside Dhaka City
Total

3. Name of Proposed Business Center:
4. Full Address of Proposed Business Center:
5. Name and Distance of Controlling Branch:
6. Purpose of Establishing Proposed Business Center:
7. Is there any conflict of interest of the Chairman/Directors of the Finance Company in the selection of the building and purchase of furniture for the Proposed Business Center? If yes, detailed information:
   (This declaration must be submitted separately along with the application)
8. Is the proposed building suitable for establishing the business center?
9. Information about other banks/finance company branches/sub-branches established in the jurisdiction:

S.No.	Name of Bank/Finance Company and Branch/Sub-branch	Address and Distance from Proposed Business Center	Monthly Rent Rate (Taka/Sq. Ft.)	Remarks (if any)

10. Details of Building Rent for Proposed Business Center:

Floor Space Area (Sq. Ft.)	Monthly Rent (Taka/Sq. Ft.)	Rent Increase Rate & Service Charges (if any)	Other Charges	Advance Amount	Rental Contract Period

(The rent of the proposed building must be market-based, and a declaration regarding this must be submitted separately along with the application)
11. Potential Expenditure for Establishing Proposed Business Center:
a) Potential expenditure in items other than IT equipment and air conditioning equipment:

S.No.	Expenditure Item	Amount of Expenditure	Expenditure per Sq. Ft.

b) Potential expenditure in the item of IT equipment and air conditioning equipment:

S.No.	Expenditure Item	Amount of Expenditure	Remarks

c) Total Amount of Expenditure (a+b):
12. Potential Manpower for Proposed Business Center:
13. Details of Security Measures Taken for Proposed Business Center:
(Security Guard/Armored Guard, CCTV, etc.)
14. Other (if applicable):
(Signature of Managing Director/Chairman)

Annexure 'C'
Information Regarding Relocation of Business Centers (Head Office/Branch/Sub-branch/Booth/Business Development Center)

1. Name of Finance Company:
2. Approval Number and Date of Business Center:
3. Name of Business Center (mention city/town for branches):
4. Full Address of Business Center:

Current Address	Proposed Address

5. Distance from Current Building to Proposed Building:
6. For Sub-branches: Name of Controlling Branch and Distance from Controlling Branch to Proposed Building:
7. Is there any conflict of interest of the Chairman/Directors of the Finance Company with the ownership of the selected building? If yes, detailed information:
   (This declaration must be submitted separately along with the application)
8. Is the selected building suitable for establishing the business center?
9. Information about other banks/finance company branches/sub-branches established in the jurisdiction:

S.No.	Name of Bank/Finance Company and Branch/Sub-branch/Booth	Address and Distance from Proposed Business Center	Monthly Rent Rate (Taka/Sq. Ft.)	Remarks (if any)

10. Details of Building Rent for Proposed Business Center:

S.No.	Rent-related Items	Current	Proposed
1	Floor Space Area (Sq. Ft.)
2	Monthly Rent (Taka/Sq. Ft.)
3	Rent Increase Rate during Contract Period
4	Advance Amount
5	Service Charges (if any)
6	Other Charges
7	Rental Contract Period

(The rent of the proposed building must be market-based, and a declaration regarding this must be submitted separately along with the application)
11. Potential Expenditure for Relocation of Business Center:
a) Potential expenditure in items other than IT equipment and air conditioning equipment:

S.No.	Expenditure Item	Amount of Expenditure	Remarks

b) Potential expenditure in the item of IT equipment and air conditioning equipment:

S.No.	Expenditure Item	Amount of Expenditure	Remarks

c) Total Amount of Expenditure (a+b):
12. Justification for Relocation of Business Center:
13. Details of Security Measures Taken (Security Guard/Armored Guard, CCTV, etc.):
(Signature of Managing Director/Chairman)

Annexure 'D'
Information Regarding Expansion of Business Centers (Head Office/Branch/Sub-branch/Booth).

1. Name of Finance Company:
2. Approval Number and Date of Business Center:
3. Name of Business Center (mention city/town for branches):
4. Full Address of Business Center (according to the table below):

Building-related Information	Current	Proposed	Remarks (if any)
Name of Building (if any)
Holding Number
Mouza
Dag and Khatian No.
Road Name (if any)
Village
Ward No.
Union/Municipality/City Corporation
Thana
District

5. Distance from Current Building to Proposed Building:
6. Is there any conflict of interest of the Chairman/Directors of the Finance Company with the ownership of the selected building? If yes, detailed information:
7. Is the selected building suitable for establishing the business center?
8. Information about other banks/finance company branches/sub-branches established in the jurisdiction (according to the table below):

S.No.	Name of Bank/Finance Company and Branch/Sub-branch	Address and Distance from Proposed Business Center	Monthly Rent Rate (Taka/Sq. Ft.)	Remarks (if any)

9. Details of Building Rent for Proposed Business Center:

S.No.	Rent-related Items	Current	Proposed
1	Floor Space Area (Sq. Ft.)
2	Monthly Rent (Taka/Sq. Ft.)
3	Rent Increase Rate during Contract Period
4	Advance Amount
5	Service Charges (if any)
6	Other Charges
7	Rental Contract Period

(The rent of the proposed building must be market-based, and a declaration regarding this must be submitted separately along with the application)
10. Potential Expenditure for Expansion of Business Center:
a) Potential expenditure in items other than IT equipment and air conditioning equipment:

S.No.	Expenditure Item	Amount of Expenditure	Remarks

b) Potential expenditure in the item of IT equipment and air conditioning equipment:

S.No.	Expenditure Item	Amount of Expenditure	Remarks

c) Total Amount of Expenditure (a+b):
11. Justification for Expansion of Business Center:
12. Details of Security Measures Taken (Security Guard/Armored Guard, CCTV, etc.):
(Signature of Managing Director/Chairman)

Annexure 'E'
Information Regarding Renewal of Establishment Rent/Lease.

1. Name of Finance Company:
2. Purpose of renting Building/Floor Space:
3. Address of Building (according to the table below):

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

4. Is there any conflict of interest of the Chairman/Directors of the Finance Company with the ownership of the floor space? If yes, detailed information:
5. Information about other banks/finance company branches/sub-branches established in the jurisdiction (according to the table below):

S.No.	Name of Bank/Finance Company and Branch/Sub-branch	Address and Distance from Proposed Business Center	Monthly Rent Rate (Taka/Sq. Ft.)	Remarks (if any)

6. Details of Rent for Proposed Floor Space:

S.No.	Rent-related Items	Current (if applicable)	Proposed
1	Floor Space Area (Sq. Ft.)
2	Monthly Rent (Taka/Sq. Ft.)
3	Rent Increase Rate during Contract Period
4	Advance Amount
5	Service Charges (if any)
6	Other Charges
7	Rental Contract Period

7. Percentage rate of rent increase compared to previous:
   (Signature of Managing Director/Chairman)