50% of bank directors will be independent: Governor
Bangladesh Bank Governor Dr. Ahsan H. Mansur said that amendments to the Bank Companies Act are being made to change the composition and size of bank boards. He said the new amendment will make it mandatory to appoint at least 50% independent directors on bank boards. He also said that the number of family members serving on the board may be reduced.
He made these remarks on Monday (July 7) at a press conference discussing the progress of implementing Risk-Based Supervision (RBS) at Bangladesh Bank.
Earlier, a meeting was held with the Deputy Governor and senior officials of Bangladesh Bank to discuss this matter. According to the meeting's decision, this new structure will be gradually introduced in all scheduled banks across the country.
Governor Ahsan H. Mansur said, "Currently, under the Bank Companies (Amendment) Act 2023, up to three members of the same family can be directors. The new amendment proposes to reduce this number further. Bangladesh Bank will form a panel to select independent directors, and directors must be chosen from this panel. However, if anyone is appointed outside the panel, they must have proper qualifications, which will be verified and approved by Bangladesh Bank. Priority will be given to educational qualifications, experience, and knowledge of the banking sector."
He also said, "Risk-based supervision has already been piloted in some banks and has shown positive results. Therefore, starting from July, this method will be gradually implemented in all scheduled banks in the country."
Bangladesh Bank stated that under this new supervision framework, it will be possible to identify financial, market, operational, legal, and strategic risks of each bank more accurately. Accordingly, necessary actions can be taken promptly. This will help assess each bank's performance individually and allow quick intervention in risky areas.
To implement the new framework, significant changes will be made within Bangladesh Bank’s internal organization. Several new supervision departments will be created, including the Supervision Policy and Coordination Department, Data Analysis and Management Department, Technology and Digital Banking Supervision Department, and Anti-Money Laundering and Counter-Terrorism Financing Risk Supervision Department. Additionally, separate supervision teams will be assigned for each bank.
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