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Bank MDs cannot resign, be sacked without central bank’s approval

 VB  Desk

VB Desk

Wed, 28 Feb 24

From now on, the managing director (MD) of a bank cannot suddenly resign whenever he wishes. Bank authorities also cannot remove any MD whimsically.

In other words, if any MD wants to resign before the end of the term, he has to give an explanation to a particular committee of the central bank and the decision of that committee will be final.

To be appointed or reappointed MD, the concerned person has to sit for a viva voce examination before the central bank committee. Only then will his appointment and tenure be decided. Contract tenure of all bank MDs shall be a maximum of three years each time, according to a circular issued by the Bangladesh Bank on Tuesday.

According to the circular, the person who has been certified eligible in the offsite or onsite inspection of Bangladesh Bank will be appointed or reappointed as the MD. No one from the family of any member of the bank's board of directors can become MD. A person must have 20 years of banking experience to become an MD. One can become MD at the age of 45, and hold this position till the age of 65. But no one shall be appointed for more than three years at a time.

The central bank circular states that to remove the MD before the expiry of the period, the bank authorities have to inform the central bank mentioning specific reasons. If the central bank approves the removal considering all the issues, it will come into effect after one month.

On the other hand, if the MD wants to resign before the end of the term, he has to submit the resignation letter to the Central Bank along with the recommendation of the bank’s board. The relevant committee of the central bank will conduct a hearing of the MD and make the final recommendation.

The same rule will be applicable to the appointment of MDs of foreign banks.

If any decision of the board of a bank appears to be detrimental to the bank, the MD will have to inform the central bank in black and white or verbally.

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