Bank directors get one-year extension to quit from subsidiaries

Bank directors have received a one-year extension to quit from a post of director or member of any subsidiaries funded by the same banks.  

It means the directors can continue holding their posts in their subsidiaries till 30 June next year, according to a circular the central bank issued on Wednesday.

Earlier in a circular on 11 May, the central bank said if any sitting chairman or director of banks is currently serving at any subsidiaries, the post must be vacated by 30 June and the central bank be informed within seven working days.

The circular also mentioned that the same directive is applicable to the chairman of any bank's executive committee, audit committee and risk management committee.

According to the new circular, all the risks including profit and loss of subsidiaries and other companies or institutions formed with the financing of a bank have to be borne by the banking company. That is why there is an obligation to manage these institutions efficiently.

According to banks, if the posts of chairman, director or members of the companies are immediately vacated, there may be a lack of experience and skills in the management of those companies. As a result, banks will be at risk of financial losses. In view of these circumstances, their tenure has been extended for one more year to create efficient successors for the posts, it added.

However, the 11 May circular also said that any shareholder director, nominated director or independent director, who has served for a duration of more than one year cannot be recruited to the same bank. If any director is currently employed at present, the most must be vacated by 31 July and the central bank be informed within the following seven working days.

The Bangladesh Bank has kept the instruction still valid.