BB sets minimum age limit of bank director at 30 yrs, raises honorarium

The signage of Bangladesh Bank is pictured in Dhaka on 19 July 2023.Reuters file photo

Bangladesh Bank on Sunday issued new guidelines outlining a set of rules for the eligibility of bank directors, fixing the minimum age limit at 30 years and raising their honorarium.

A bank director must also have professional or business experience of 10 years and no experience before he or she turns 18 will be acceptable.

The central bank also set the tenure of bank chairmanship for a maximum of two terms, and also increased the facilities for independent directors, but did not clarify who can be the independent director at banks. 

The guidelines, however, stated nothing about those who control the banks through several nominated directors. The central bank said the guidelines will come into effect soon.

Bangladesh Bank unveiled the new guidelines on banks a week after it announced an 11-point roadmap to bring down bad loans to zero by 30 June 2026.

Regarding the guidelines, former central bank governor Salehuddin Ahmed told Prothom Alo various criteria of bank shareholding directors had undergone revision for a long to fix the banking sector and this time it happened too.

It is a good initiative that the power and facilities of independent directors have increased, but the banking sector is in such a fragile state it should not be delayed depending on directors. The bank must be run by actual independent directors instead of the directors loyal to the chairman or board.

Eligibility of directors

Bangladesh Bank has previously set the eligibilities of the bank directors, but the minimum age limit of 30 years has been included anew. According to Bangladesh Bank, existing directors are unlikely to be left out of the board since the new law to be applicable when anyone applies for directorship.

No willful loan defaulter can be a director in five years since clearing his name. Bank directors mandatorily submit their loan statements to Bangladesh Bank every three months.

It must be ensured whether independent directors hold shares in the respective bank, as well as currently having any interest with the bank or in the past.

No alternative director can be appointed for a maximum of three consecutive months in a year and a person having bank loans is ineligible to become an alternative director. Besides, alternative directors holding positions over three months since June 2023 have been asked to resign from their positions.

The tenure of the chairman of all committees at a bank will be a maximum of three years. Besides, not more than one person from a family can be a member of the bank’s executive committee. Previously, two people from a family could become members of the executive committee.

At least two among five members of the bank’s audit committee must be independent directors. One of the independent directors must become the committee chairman. A member can hold chairmanship for a term of three years.

According to the guidelines, nothing can be approved outside the agenda during the meeting of the board of directors. Any director raising a note of dissent must be mentioned in the meeting minutes. No other person except for the managing director and company secretary can participate in the meeting of the bank’s board of directors. A bank official may present at the meeting for a certain period in any special circumstance.

The guidelines also include the matter of removing and appointing bank directors in the public interest.

Rise in honorarium

The new guidelines also raised the honorarium of bank directors for attendance at each meeting from Tk 8,000 to Tk 10,000. Besides, an independent director will receive a monthly honorarium of Tk 50,000 in addition to the meeting fees.

Directors can receive fees for a maximum of two meetings of the board of directors, four meetings of the executive committee, a meeting of the audit committee and a meeting of the risk management committee in a month.

Former Bangladesh Bank governor Salehuddin Ahmed said it is necessary to increase the independence of banks’ managing directors and their accountability, as well as to replace managing directors who are loyal to directors with persons working for the interest of depositors.