Central bank clarified the definition of new director

Sunbd Desk || Published: 2021-04-04 16:19:08 || Updated: 2021-04-04 16:19:42

As the definition of a new director is not clear in the policy, some banks have not sought the approval of the central bank to appoint a director with their own interpretation.

The central bank’s Banking Regulation and Policy Department (BRPD) clarified the definition of the new director in a circular issued on Sunday.

The new director will mean all the directors nominated at the bank’s board meeting and elected or re-elected at the annual general meeting.

In this case, each re-appointment will be considered as a new appointment and prior approval of the Central Bank is mandatory for the appointment of new directors.

The Banking Companies Act, amended in 2017, provides for four directors from the same family instead of two. At the same time, the term of one director was changed from 6 years in two consecutive terms to 9 years in three consecutive terms.

At the end of the term, the same director is re-appointed or re-elected. In this case, many banks are not seeking the approval of the central bank for their re-employment. The central bank made this clear in its directive on Sunday.

Asked about this, an official of Bangladesh Bank said that many banks are not seeking the approval of the central bank for re-appointment of directors. As an explanation, the banks said, since the previous person is being re-employed, there is no need to get new approval.

Noting that this was undermining the purpose of the bank’s policy of appointing directors, he said that each re-appointed director would be treated as a new director and in this case the prior approval of the central bank would be required.

The policy for the appointment of a new director states that in case of prior approval of the central bank, the information of the nominee for the post of director, his declaration, declaration of protection of his confidentiality, approval of Bangladesh Securities and Exchange Commission if he is an independent director must be given.

In addition, in order to prevent a defaulter from becoming a director, the nominee has to submit a CIB (Credit Information Bureau) report on the loan to the central bank. Apart from this, the list of directors currently appointed has to be given to the central bank.

Sunbd/NJ

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