The Bangladesh Bank has relaxed some provisions for the appointment of independent director to banks.
The central bank issued a circular in this regard on July 18.
It relaxed provisions in appointing banks鈥� former chief executive officer and chartered accountant as independent director while it gave importance on graduation and post-graduation degree.
On February 14, the central bank had said that independent directors must have a graduation or a post-graduation in economics, banking, finance, accounting, business administration, law or cost accounting.
However, in the new circular it said that banks鈥� former chief executive officer, chartered accountant, or cost management accountant having graduation or post-graduation in any subject will be eligible for joining as independent director in banks.
Besides, qualified officials from the finance ministry, commerce ministry, industries ministry and law ministry, teachers in accounting or business, law and information technology, lawyers and bankers may get priority in appointing independent director.
For digital banks, priority will be given to higher education in information technology for appointing as independent director.
The central bank issued a circular on February 14 with giving instruction of appointment of independent director in banks, their responsibilities and honorarium.
It was the first guidelines regarding appointment of independent director in banks.
But, on July 16, the central bank replaced two provisions of the guidelines and kept others unchanged.
According to the circular, banks must appoint independent directors aged between 45 and 75 years.
Independent directors can serve for three years and can be reappointed in accordance with Section 15 of the Bank Company Act, 1991.
However, the Bangladesh Bank鈥檚 permission is required for the appointment, reappointment or removal of independent directors.
If a bank鈥檚 board wishes to remove an independent director, they must request the Bangladesh Bank, stating specific reasons.
The central bank, in turn, can remove any independent director by providing specific reasons.
Family members of appointed independent directors cannot hold shares in the bank or be in any profitable position within the bank, it said.
Banks are required to pay Tk聽50,000 a month to each independent director, along with a fee of Tk聽10,000 for attending each meeting.
Independent directors must inform the Bangladesh Bank of any violation of provisions in the Bank Company Act, 1991 or that of any other rules by the board of directors.
If opinions of independent directors are not taken seriously or contradictions are found in the bank鈥檚 operations, they must inform the Bangladesh Bank鈥檚 Department of Off-Site Supervision and Banking Regulation and Policy Department in writing.
The notification specifies that the maximum number of directors for a bank is 20, with three of them being independent directors.
However, if there are fewer than 20 directors, there can be no more than two independent directors.
Individuals convicted of any offence, fraudulent activity, financial misconduct or involvement in other illegal activities are ineligible for appointment as directors or independent directors.