Central bank issues advisory on formation of bank boards

Bangladesh Bank (BB) has issued a notification regarding the formation of a bank's board of directors, as well as prescribing the responsibilities of the directors as per the ‘Bank Company Act’.

The Banking Regulations and Policy Department (BRPD) of Bangladesh Bank on Sunday issued the notification to ensure dynamism and good governance in the banking sector.

The notification was sent to the managing directors and chief executive officers of all scheduled banks for immediate execution.

According to the notification, the number of directors of a bank will be a maximum of 20, and independent directors will be three.

However, if there are less than 20 directors, there cannot be more than two independent directors. At the same time not more than three members from a single family can be directors, the notification stated.

To be a member of the board of directors, the minimum age of the concerned person must be 30 years. And should have 10 years of management business or professional experience.

According to the central bank, this policy has been formulated to ensure good governance in the banks. At the same time, the board of directors of the bank must be formed by suitable and professionally competent persons to carry out the business activities properly and smoothly.

“The bank's activities are mainly conducted with the money of the depositors. In this case, it is essential to protect the interest of the depositors. For this reason, the responsibility of the board of directors of a bank company is more important than that of other companies,” the BB notification stated.

Amendments were brought in the Bank-Company Act in 2023 to ensure good governance in the banking sector.