NBFI chairmen, directors barred from serving at subsidiaries

The Bangladesh Bank has barred the chairman or director of a non-bank financial institution (NBFI) from holding a post at a subsidiary of the entity.

The Department of Financial Institutions and Markets of the central bank issued a circular in this regard on Thursday.

The directive is aimed at bringing discipline in the financial sector. A day earlier, the central bank had issued a similar directive for bank directors.

Thursday’s circular said the chairman or any member of the executive, audit, and risk management committees of an NBFI cannot serve as the board chairman, director, or member at any subsidiary or sponsor company of that institution.

Those who now hold any such position will have to step down by June 30 and inform the central bank within seven working days, it said.

Besides, any shareholder director or nominated member from shareholders or independent director of an NBFI serving on the board for a year will not be eligible for being appointed as a regular or contractual employee of that company.

Such directors also have to resign by July 31 and inform the central bank within seven working days.

The circular said according to the financial institutions act’s section 25(3), a director of an NBFI cannot be a director of any other bank, financial institution, or insurance company at the same time.

This section of the law should be strictly complied with, the central bank said.

It further said the circular’s instructions should be presented at the next board meeting of every NBFI.