Govt will no longer directly appoint MDs at six state-run banks

Highlights: 

• Govt changes appointment process for state-owned bank MDs
• Bank boards will make final MD appointments
• Seven-member committee will nominate suitable candidates
• Bangladesh Bank clearance remains mandatory before appointments
• New policy sets age, qualification and experience criteria

The government has introduced a significant reform in the appointment process for managing directors (MDs) and chief executive officers (CEOs) of state-owned commercial banks, replacing direct government appointments with a nomination-based system.

Under the new policy, the government will only nominate candidates for the top executive positions at Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, BASIC Bank, and Bangladesh Development Bank. 

The final appointment, however, will be made by the respective banks' boards of directors after obtaining a mandatory No Objection Certificate (NOC) from Bangladesh Bank.

The revised appointment framework was announced in a recent policy guideline issued by the Financial Institutions Division. The move is aimed at enhancing transparency, promoting professionalism, and improving governance in the banking sector.

According to the policy, a seven-member high-level Nomination Committee, chaired by the finance minister, will oversee the selection process. 

The committee will evaluate the candidates based on their academic qualifications, banking experience, and professional record, and will also conduct interviews before preparing a merit-based shortlist. 

Following the committee's recommendation, Bangladesh Bank's clearance will be required before the bank's board issues the final appointment.

The policy does not apply to six specialised banks, including Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank, or to Bangladesh House Building Finance Corporation and the Investment Corporation of Bangladesh.

The new guidelines also set stricter eligibility criteria for MD candidates. Applicants must hold at least a master's degree, with preference given to those possessing advanced qualifications in economics, accounting, finance, banking, or business administration (MBA). Candidates must not have received a third division or equivalent grade at any stage of their academic career.

In addition, candidates must be between 45 and 65 years of age. Appointments will be made on a three-year contractual basis. Individuals with records of serious disciplinary misconduct, loan default, corruption allegations, or involvement in money laundering will be disqualified. Experience in information technology and risk management will be considered an added advantage.

While the boards of state-owned banks will now have the authority to make final MD appointments, the government will, however, continue to manage the promotion and posting of Deputy Managing Directors (DMDs) and General Managers (GMs) in state-owned banks, specialised banks, and financial institutions.

As part of the broader deregulation initiative, final approval for DMD and GM appointments will now rest with the finance minister instead of the Prime Minister's Office.