BB tightens director appointment rules

Bangladesh Bank has set 30 years as the minimum age to be appointed as bank director. Previously, there was no such age limit for the position.

Besides, the central bank introduced new more criteria related to the bank director appointment to ensure good governance in the country’s banking sector.

Bangladesh Bank issued a circular in this regard on Sunday, saying that the rules were made in line with the Bank Company (Amendment) Act, 2023.

According to the circular, a candidate seeking to be a bank’s director must also have at least 10 years of experience in either management or business or any professional work.

However, the work experience before the age of 18 years will not be taken into account.

Cannot be convicted of crimes

The aspirant must not be convicted of a criminal offence such as frauds, financial crimes, or any illegal activities.

He or she should not get any adverse remarks or comments from a court of law in any civil or criminal cases and s not default of any bank or financial institution loans - personal or institutional.

The individual will also not be a tax defaulter- either personally or organisationally. If the person is employed in any position in a bank company concerned,  he or she can become a member of the board of directors unless there is a five-year gap in service.

A person listed as a willful defaulter by a banking company or by a financial institution established under the Finance Companies Act, 2023 shall not be eligible to become a director unless five years have elapsed after being discharged from that list.

An individual aspiring to be a director of a bank must not have been associated with any company or establishment whose registration or licence has been revoked or which has been dissolved; Not in default for any loan taken from any bank or financial institution in his own name or in the name of the organisation concerned.

Furthermore, if someone becomes a director of a bank or company, they cannot simultaneously hold any profitable position in any subsidiary company of other banks or companies, financial institutions, insurance companies, or similar entities as a director, advisor, consultant, or in any other beneficial position.

Additionally, he or she cannot hold positions such as external auditor, legal advisor, consultant, or any other profitable position in the same bank or company.

Furthermore, an individual cannot consecutively hold the position of director in a bank or company for more than 12 years.

After the expiration of this term, they cannot be reappointed to the position of director in the same bank or company until three years have passed since the end of their previous term.

Formation of board of directors of a bank company

The board of directors of a bank company shall consist of shareholder directors, representative directors on behalf of shareholder institutions and independent directors. In relevant cases, alternative directors may also be members of the management board.

As per the new policy, the board of directors will be maximum 20 and independent directors will be three. However, if there are less than 20 directors, there cannot be more than two independent directors.

Not more than three members from a single family at the same time can hold positions as directors of a bank.

In the board, no more than two representatives of any single family, who are associated with more than two financially interested or controlled entities, can serve as directors.