The Bangladesh Bank (BB) has discouraged the board chairmen, chief executives and other high-ups of commercial banks from using luxurious vehicles.
In a circular, the central bank has also asked them to slash expenses of wasteful decoration.
The circular issued on Tuesday from BB’s Banking Regulation and Policy Department noted that some commercial bank officials were recently found expending too much for extravagant purposes.
“Issues like purchase of luxurious vehicles for bank officials, random use of those, holding events for numerous committees outside the capital and expensive receptions in the name of business development have been noticed by the central bank,” said the circular.
To discourage the tendency, the Bangladesh Bank has set a ceiling of Tk50 lakh for a sedan and Tk1 crore for a sports utility vehicle (SUV).
Earlier in 2014, the central bank had fixed the limit for vehicle purchase.
The Bangladesh Bank in its Tuesday circular prohibited collecting vehicles from others using the lease financing facility. However, banks and companies are allowed to buy cars similar to security vehicles for cash transportation.
The circular also said: “Increasing the number of motor vehicles must match with manpower and branch expansion. Annual expenditure growth of this sector must be brought under 10 percent.
“Vehicles used by board chairmen or chief executives will be applicable for replacement at least after five years. Board meetings and Annual General Meetings must be informed about the motorpool and expenditure updates,” said the circular.
Banks were asked to use 6,000 square-feet in urban spaces and 3,000 square-feet in rural areas in case of setting up a new branch or shifting an existing one.
Except for IT equipment, decoration cost must be below Tk1,850 per square-feet for new branch while this cost should not exceed Tk1,250 for branch relocation.
The cost for IT equipment also must be logical. Quality and efficient service should get priority instead of show off. The Bangladesh Bank also directed the banks to check excessive costs in the name of development, branding and advertisement.