The independent directors of the banks in Bangladesh must be aged between 45 and 75 with a monthly remuneration of Tk 50,000, according to the central bank.
To this end, the Banking Regulation and Policy Department of the Bangladesh Bank (BB) issued a guideline on Wednesday.
It expounded the appointment of independent directors, their duties and responsibilities as well as remunerations as per the Bank Company Act.
A senior central bank official said the BB never issued such detailed qualification in the past.
According to him, an independent director does not own a bank, so the eligibility and the remuneration for them should be well-defined.
Earlier, the BB issued a detailed guideline on the members of a bank's board to ensure good governance in the banking system.
To protect depositors' interests by avoiding conflicts of interest, bank companies must have clear policies on the appointment of independent directors, it cited.
According to subsection (9) of section 15 of the Bank Companies Act-1991, an independent director is independent from the management and shareholders of a bank company and he/she will give his/her opinion only in the interest of the bank company.
The independent director should not have any real interest or visible interest with bank and any person associated with bank in the past, present or future.
A bank company can have maximum 20 directors with three independent directors.
However, if the number of directors is less than 20, the number of independent directors will be two only.
In case of appointing an independent director, the person concerned should have minimum 10 years of management or business or professional experience.
The minimum age of the person for holding office as an independent director should be 45 and the highest 75.
The aspirant must have a master's/postgraduate degree in economics, banking, finance, business administration, law and accountancy from a recognised university.
He/she cannot be tax defaulters and they were never declared bankrupt by a court.
A person listed as a wilful defaulter shall not be eligible to become a director of a bank until 5 years have elapsed after being discharged from that list.
The director will receive a fixed remuneration of Tk 50,000 (subject to applicable tax deduction) per month.
He/she will receive 10,000 (subject to deduction of applicable tax) as honorarium for attending each meeting of the board/associate committee of the bank company.
Irrespective of the number of meetings of board directors and other subsidiary committees in a month, honorarium should be paid for attending a maximum of two board meetings, four executive committee meetings, one audit committee meeting and one risk management committee meeting.
An independent director should be appointed for a term of three years. At the end of the tenure, he/she can be elected for the next term subject to the provisions of section 15 of the Act.
The board concerned may request the BB to remove the director by citing specific reasons.
The independent director can resign from the post of independent director by giving seven days' notice. The BB may remove any such director for specific reasons.
When contacted, Dr Ahsan H Mansur, executive director of Policy Research Institute of Bangladesh, said this is a good move as it will help attract qualified and efficient people in the board.
According to him, the age might have been increased further as there are many qualified people who have crossed 75.
Honorarium also should be increased further considering tax cuts and higher inflation, he told the FE.
An independent director said the number of three or two directors on a bank's board could not influence the board's decision.
"We're two or three in numbers, so we have a little role to play in the decision-making process," an independent director told the FE, seeking anonymity.
Instead of giving a lump-sum amount per month, he suggested that the amount of honorarium for attending board meetings be increased.
jasimharoon@yahoo.com