Consider loan default performance while recruiting bank MD: Cenbank issues guidelines

The Bangladesh Bank has issued guidelines to consider performance indicators in loan default and recovery while appointing a bank's managing director or chief executive officer.

A central bank circular today, sent to the top executives of all banks for immediate execution, says a bank MD cannot be appointed if the target of recovery from defaulted and non-performing loans is not achieved.

Also, the age of an MD should be minimum 45 to maximum 65 years.

The guideline states that to ensure good governance in the banking sector, it is necessary to appoint a suitable, professionally competent, and experienced managing director or chief executive officer.

Banks are facing greater challenges in operational management along with managing business and technical risks than ever before. In this context, there is a need to issue clear instructions regarding the appointment of the managing director or chief executive officer of the bank, said the central bank.

A central bank official told TBS that now, if a managing director fails to fulfil his responsibilities, he will be held accountable in the future as well. "Such provisions did not exist before. Moreover, there were no directives regarding the minimum age for appointment as a managing director."

According to the central bank guidelines, festival alliance for all employees, including the managing director, cannot exceed Tk15 lakh.

A bank director's son or daughter cannot be employed as a managing director or chief executive officer in that bank. In other words, anyone who becomes the managing director of a bank cannot have any family members involved in the bank's board of directors.

Not only that, the person who becomes the managing director of a bank cannot be employed in any other business or profession. Additionally, he or she cannot be involved in any business interest related to the bank.

Similarly, he or she cannot have any connection with an organisation under ownership of a director of the bank.

A person who is punished by any criminal court or has got adverse observation or comment in any court judgement cannot be the managing director of a bank.

He or she also must not be convicted of any violation of rules, regulations or rules of any regulatory authorities. He or she cannot be associated with the ownership of any company or organisation whose registration or licence has been cancelled or the company or organisation has been wound up.

He or she cannot be associated as an officer of any company or financial institution whose registration or licence has been cancelled due to his direct or indirect criminal offence. He or she must not be removed/dismissed/demoted or discharged from his post while being the chairman or director or officer or employee of any company or organisation due to embezzlement, corruption, forgery and moral lapse.