DFIM Circular No. 07: Restrictions for ensuring discipline in NBFI's management

Department of Financial Institutions and Markets Bangladesh Bank Head Office Dhaka.
Ref No.: DFIM Circular No. 07
To:
All Chief Executive/Managing Directors
All Financial Institutions operating in Bangladesh.

Dear Sir,

Regarding certain restrictions in the context of ensuring discipline in the operation and management of Financial Institutions.

1. Section 25(3) of the Financial Institutions Act, 1993 imposes restrictions that no person shall be a director of more than one Financial Institution or more than one Bank Company or more than one General Insurance Company or more than one Life Insurance Company at the same time.

2. Now, in order to ensure greater discipline and good governance in the operation and management of Financial Institutions, the following instructions are issued:

2.1. Any person appointed as Chairman of the Board of Directors or members of the Board Committees of a Financial Institution, such as the Executive Committee, Audit Committee, and Risk Management Committee, shall not be eligible to serve as Chairman/Director/Member of the Board of Directors or Governing Body, however named, of any subsidiary company of the said Financial Institution or any company/institution/foundation established and operated under the authorization of the Financial Institution.

2.2. If any person serves as a Shareholder Director, Nominated/Representative Director, or Independent Director of a Financial Institution for a minimum term of 01 year, such person shall never be employed or appointed in any regular or contractual position of the said Financial Institution after the expiration of the said term or upon resignation/retirement.

3. As mentioned in paragraph 2.1, if any person is serving as Chairman/Director/Member of the Board of Directors/Governing Body, however named, of such an institution, such person must vacate the respective position by resigning/withdrawing from the post by June 30, 2022, and the relevant Financial Institution must inform the Department of Financial Institutions and Markets within 07 working days of the month immediately following the expiration of the aforementioned period.

4. If any such employment is provided in the Financial Institution as mentioned in paragraph 2.2, the said person(s) must vacate the respective position by resigning/withdrawing from the post by July 31, 2022, and the relevant Financial Institution must inform the Department of Financial Institutions and Markets within 07 working days of the month immediately following the expiration of the aforementioned period.

5. Immediately after the issuance of this circular, the subject matter of the circular must be presented at the next Board of Directors meeting, and necessary actions must be taken regarding this matter.

6. These instructions are issued under the powers conferred by Section 18(6) of the Financial Institutions Act, 1993.

Yours faithfully,

(Md. Zulkar Nayen)
General Manager
Phone: 9530178

Date:
12 May 2022