Financial Honors: Independent Directors’ Perks Revealed!

Bangladesh Bank has issued new instructions. From now on, the appointment, qualifications and privileges of independent directors of financial institutions like banks will be determined regarding this.

According to the guidelines, if a person has any past, present or future interest or visible interest related to any financial institution, he/she cannot be an independent director of the concerned financial institution. Independent directors will get a fixed remuneration of 50,000 BDT per month. Apart from this, he/she will get 10,000 BDT for each board meeting.

Bangladesh Bank’s directives regarding the appointment of independent directors of financial institutions also state that from now on, no one under the age of 45 can be an independent director. The age of individual directors should be a minimum of 45 to a maximum of 75 years.

Apart from this, to become an independent director of a financial institution, one must have a bachelor’s or master’s degree in economics, banking, finance, business administration, law, accounting or cost accounting from a recognized university in the country.

According to the guidelines, to become an independent director of a financial institution, one should have 10 years of management, business or professional experience.

However, if someone has shares in the financial institution in his name or the name of his family, or if someone in the family is working in a profitable position in that institution, he/she cannot be an independent director. Individual directors can express their grievances or their views directly to the central bank.

In the appointment of independent directors, the business faculty of public and private universities or experienced teachers in business administration, management, law and information technology, persons engaged in the legal profession, professional accountants, experienced bankers, experienced officers of the Ministry of Commerce, Finance, Industry and Law will be given priority.

However, a person cannot be an independent director of a financial institution if he/she does not pay the dues of the creditor or, if he/she is not exempted from the collection of dues through an arrangement with the creditor.

Even tax evasion, debt defaulters, involved in fraud, or adverse observation of court judgment against anyone will be considered ineligible to be independent directors.

Also, a person associated with the ownership of a deregistered or defunct company cannot be an independent director.

Bangladesh Bank says that according to the new provision, action can be taken against an individual director if adverse observations are found due to negligence of duty. If a financial institution has 15 directors there should be at least 2 independent directors.

Even if the new provision is made, among the existing individual directors who do not have these qualifications, they can continue in this position till the end of the term. As a result, no one has to leave the post now.

Independent directors of financial institutions like banks will also get a fixed remuneration of 50 thousand BDT per month. Earlier, individual directors did not have permanent remuneration.

Apart from this, they will receive a maximum of 10,000 BDT as an honorarium for attending every meeting of the company’s board or subsidiary committee. A financial institution cannot remove an individual director at will. This will require the approval of the central bank.

The role of individual directors of financial institutions besides banks has been discussed for a long time. Because the chairman of many financial institutions has appointed their relatives and employees as independent directors in their institutions.

These directors are unable to play a role in protecting the interests of depositors and shareholders.