Ex-officials barred from becoming director of banks

Staff Correspondent | Published: 22:58, May 16,2021 | Updated: 23:19, May 16,2021

 
 

No former contractual or permanent officials of a scheduled bank would be allowed to hold directorship in the bank, according to a Bangladesh Bank directive.

The central bank has issued the directive as several former bank employees are holding directorship in banks they previously served, said a senior BB official.

The official said that the BB issued a circular in this regard on May 12 to prevent employees from supporting bank directors in any unfair means in expectation to get rewarded with the directorship position after their service tenure expired in the banks.

‘The central bank will now scrutinise whether there is any such director in the bank boards or not,’ he said, adding that the BB would take measures if it found any such director in bank boards.

‘Banks’ contractual or permanent employees would never be eligible to hold directorship position in a bank after their retirement or termination or end of contract with the same bank,’ the BB circular said.

The central bank also extended the tenure of service gap that would make a director, managing director or chief executive officer or the employees two rank immediate next to the post of CEO eligible to be appointed as adviser or consultant of the same bank after their service expiry.

To get appointed as adviser or consultant of a bank where the director, managing director or chief executive officer or the employees two ranks immediately next to the post of CEO were employed, the tenure gap has been set at five years under the new directive of the central bank.

Under the BB’s previous circular issued on October 27 of the year 2013, the tenure of service gap to be eligible as adviser or consultant was only one year.

The central bank in its May 12 circular also repealed the circular issued on October 27, 2013.

Upholding the spirit of section 15(9) of Bank Company Act, 1991 by ensuring neutrality, professional quality and corporate governance in operations and managing banks has been mentioned as the reason for the imposition of the embargo.

The section of the Bank Company Act, 1991 bars individuals having any interest in past, present or future in a bank would not be considered eligible to be appointed as independent director of the same bank.

In line with the section, banks cannot appoint any of its former directors, managing directors or any other permanent or contractual employee as independent director in their boards.

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