No bank official can ever be director of that bank: BB

Bangladesh Bank has barred senior management of a bank from ever becoming a director of that particular bank, independent or otherwise.

The central bank issued a circular in this regard on Wednesday. Top bankers, present and former, got surprised to see the BB taking such a tough stance.

“This is a bit strange and in contrast to best practices in the developed economies where it’s not uncommon to see an ex-CEO is taking a role in the board, sometimes even as the chairman of the board of directors,” a former chief executive officer of a leading private bank told the Business Insider Bangladesh.

He said it is felt that long association with the bank in management and the knowledge of the company’s inherent strengths and weaknesses along with the company culture enables such an experienced resource to contribute in the continuing growth and resilience of the company.

“I really don’t know what was in the thought process of the regulator while introducing this new restriction,” another CEO remarked.

The circular also said that no managing director, additional managing director and deputy managing director can become a consultant or adviser of that particular bank before completing five years since their retirement.

In the circular, the BB asked all managing directors to place the update before their respective board of directors at the next meeting.