BB warns banks against excessive spending on meetings, car purchase

Staff Correspondent | Published: 00:00, Aug 21,2019

 
 

Bangladesh Bank on Tuesday asked banks to refrain from making unnecessary expenses including purchase of luxurious cars, posh decoration at their branches and holding board meetings outside Dhaka.

The BB’s banking regulation and policy department issued a circular in this regard with an immediate effect as it observed tendency of such expenses in a number of banks recent times.

The central bank asked banks not to purchase sedan cars with more than Tk 50 lakh and sport utility vehicle with more than Tk 1 crore.

However, banks would be allowed to purchase cars as like the security forces for transportation of remittance fund.

No directors except chairman of a bank’s board would be entitled to get car facility from the bank while only the entitled officials would also enjoy banks’ car facility.

The cars which would be allocated for the chief executives and chairmen for personal use must not be replaced before five years of use.

Besides, banks were also instructed to avoid holding board meetings and other committee meetings outside Dhaka as much as possible, it said.

In case of holding such meetings, banks were asked to inform the central bank’s BRPD department 10 days prior to holding such meeting with details of the participants.

The BB also asked banks to refrain from making excessive expenses in the name of business development, branding and advertisement.

In case of renting new space or relocating branches, banks were asked to limit it within 6,000 square feet in the urban areas and 3,000 square feet in the rural areas.

Banks must keep per square feet expenses within Tk 1,850 for new branch’s interior decoration and Tk 1,250 for relocation of a branch.

The BB circular said that adopting cost effective strategy was very much important for the banks to retain trust of the depositors and shareholders on the management.

Avoiding unnecessary expenses increases banks’ profitability along with enabling the banks’ business expansion by the way of setting competitive interest rate, fees and charges, it said.

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