2024-02-15 04:14:20
Bangladesh Bank has issued new instructions for the appointment of independent directors of the bank. According to the new guidelines, banks will not be able to appoint individual directors who are involved in any illegal activities while performing their duties in banking or profession, defaulters, declared bankrupt by court.
On Wednesday (February 14), the Banking Regulations and Policy Department of Bangladesh Bank issued a circular in this regard and sent it to the chairman, board of directors, managing director and chief executive officer of all banks.
According to the new guidelines regarding the appointment of ‘independent directors’ in banking companies and their duties and responsibilities, it is essential that the board of directors of the bank should be composed of suitable and professionally skilled persons to formulate the policies of the bank and conduct the banking activities smoothly, to ensure the good governance of the bank. The main source of money collection of the bank is depositors’ money. Hence, gaining and maintaining the trust of depositors is essential for a banking company. The responsibility of individual directors is more important than that of other directors to be independent on the board of directors of bank companies and only to protect the interests of the depositors of the bank. In order to protect the interests of the depositors by avoiding conflict of interest, bank companies must have clear policies in the appointment of independent directors. In order to fulfill these objectives, banks have made policies to be followed in appointing independent directors of bank companies and determining his or their responsibilities and powers. The policy contains instructions on various matters including definition of individual director, number of directors, qualifications and disqualifications, experience, activities, remuneration.
According to the definition of independent director, as explained in sub-section (9) of section 15 of the Banking Companies Act, 1991, ‘independent director’ means ‘a person who is independent of the management and shareholders of the banking company and who acts exclusively in the interests of the banking company. Give feedback. There is no past, present or future real interest or apparent interest with the bank or any person associated with the bank.
According to the guidelines on the number of independent directors, a bank company will have a maximum of 20 directors, including at least 3 independent directors. However, if the number of directors of a bank-company is less than 20, the number of individual directors will be at least 2.
Regarding the experience of individual directors, the person concerned should have a minimum of 10 years of management or business or professional experience for appointment as an independent director. The minimum age of the concerned person shall be 45 years and the maximum age shall be 75 years in case of holding office as an independent director. Apart from this, academic education qualification is also mentioned in the policy.
Nominee Independent Director A person convicted of any crime, involved in forgery, financial crime or other illegal activities, defaulter, declared insolvent by a court cannot be an independent director.
Regarding the financial benefits, the individual directors of the bank-company will receive 50 thousand taka per month as permanent honorarium (subject to deduction of applicable tax), a maximum of 10 thousand taka will be given as honorarium for attending each meeting of the board of directors or subsidiary committee. However, regardless of the number of meetings, the individual directors will receive negotiable honorarium for attending 2 meetings of the highest board of directors, 4 meetings of the executive committee, 1 meeting of the audit committee and 1 meeting of the risk management committee.
The Central Bank has issued this directive by virtue of Section 15(9) of the Bank-Company Act, 1991. Which will be effective immediately.