Cenbank sets minimum age for bank directors at 30

Highlights

• Defaulters can't be director for 5 years after their default status ends
• Directors to get maximum Tk10,000 per board meeting
• Independent directors to get monthly honorarium of Tk50,000
• No more than 3 family members can serve as directors
• Alternate directors can't get loans from the bank during tenure

The central bank for the first time has set a minimum age for bank directors at 30 with at least 10 years of management, business or professional experience after turning 18.

The age limit was introduced in a new guideline by the banking regulator in regard to the formation of the board of directors and responsibilities of directors of banks. This new guideline takes immediate effect.

As per the guidelines, individuals who have defaulted on loans will be ineligible to serve as directors for a period of five years after their default status ends.

A director will get a maximum Tk10,000 per attendance in board meetings, while an independent director will get a monthly honorarium of Tk50,000 along with attendance fee. 

At present, there is no age limit or business experience requirement for bank directors. Anyone having a minimum 2% share can sit in the board, subject to taking consent from the central bank.

The Bangladesh Bank has issued the guideline in a bid to bring discipline in the banking sector, defining their responsibilities and eligibility, said the guideline. 

Prime Bank Chairman Tanjil Chowdhury welcomed the new guideline, saying it will promote good governance in banks. 

He said it will uphold integrity and safeguard shareholders' interests. It will also enhance the accountability of a bank's board of directors.

Salehuddin Ahmed, former Bangladesh Bank governor, told The Business Standard that the policy is beneficial. However, he said the age limit is "superficial" as there are capable individuals under the age of 30.

Therefore, he said, for appointing directors the focus should be on a strong track record, honesty, and experience. It is important to enhance transparency and accountability. 

He suggested a comprehensive overhaul of the policy rather than partial amendments.

Highlights in the guidelines

If a board of directors has 20 members, it must have at least 3 independent directors. If the board has fewer than 20 members, it should have at least 2 independent directors.

No more than three family members can serve as directors simultaneously in any bank, as per the guidelines.

Only one representative director per organisation is allowed on the board. Besides, no individual shareholder can serve as a representative director.

A director cannot serve for more than 12 consecutive years. After this period, they must wait three years before reappointment.

Alternate directors can be appointed if a director is abroad for three consecutive months. However, an alternate director can serve for a maximum of three consecutive months per year.

Alternate directors cannot receive loans or loan facilities from the bank during their tenure. They must adhere to all loan restrictions applicable to regular directors.

If an alternate director serves for more than three consecutive months, they must resign or transfer their duties to the original director.