NBFIs cannot have more than one director from an entity: Cenbank

Non-bank financial institutions (NBFIs) can no longer appoint more than one director from an entity on the board of directors, according to the latest Bangladesh Bank circular. 

"No more than one representative from any institution or company can be appointed as a director of a financial institution. Even no other person nominated by entities of his vested interest can be a representative director on the board of directors," reads the circular issued by the Department of Financial Institutions and Markets on Wednesday.

"If an NBFI director holds 20% ownership or voting rights in a company, that entity will be considered his vested interest. In that case, no people from the entity can be the representative director on the NBFI board," explained a Bangladesh Bank official. 

He added that a person who owns shares in any company can become a director of a financial institution. "However, no other person can be a director against the shares of that person."

Earlier in August 2022, the Bangladesh Bank asked NBFIs to take its approval in appointing, re-appointing, relieving or removing their directors. 

Apart from this, the central bank set qualifications to become a director of a financial institution, which include holding minimum shares as per the provisions of the Bangladesh Securities and Exchange Commission, 10 years of experience and being not a loan defaulter.

Meanwhile, the Bangladesh Bank, in a separate circular on the same day, directed banks to arrange hybrid meetings – having both online and physical components – as part of austerity measures and to preserve electricity. 

The directive is applicable to any meeting which can be arranged online, while also having a portion of physical interactions.

Amid a fresh round of belt-tightening by the government, the central bank in July instructed banks not to buy new cars until June 2023. Besides, banks' spending for hospitality, travel, furniture and stationery was slashed by 50% due to the global economic situation.