Bank chairmen barred from holding dual position

The Bangladesh Bank on Thursday issued a directive prohibiting the chairman of a bank or its subsidiary committee from concurrently holding a director position in the bank's foundation or any other subsidiary.

These individuals have been requested to resign from one of the positions by June 30.

However, the central bank has granted an exception to this rule for individuals occupying positions in exchange houses and money transfer companies located outside the country.

The central bank’s Banking Regulations and Policy Department (BRPD) issued the directives.

Earlier in May last year, the central bank had already directed that any person appointed as chairman of a bank's executive committee, audit committee, or risk management committee should not simultaneously serve as a director in the bank's subsidiary company or foundation.

Initially, the deadline for compliance was set for June 30, 2022, but it was later extended until June 30, 2023.

But the central bank later backtracked from the decision because of the war centring Ukraine which has posed challenges in collecting remittances and the scarcity of experienced and skilled personnel capable of effectively handling these remittance-related challenges.

According to the new circular, exchange houses or money transfer companies which are the subsidiary of a Bangladeshi bank, its chairman can hold directorships of those subsidiaries.

As the new directive, Bangladesh Bank believes that remittance inflow will have a positive impact.

But in the last financial year, a record 11.37 lakh manpower was exported, but the remittance income was only $21.47 billion.

Experts say that due to the lack of market-based exchange rates, the gap between formal and informal exchange rate widens and the country’s remittances inflow increases through unofficial channels. They believe that the potential remittance income could be $24 billion in FY23.