BB restricts formation of various committees by banks, NBFIs

Bangladesh Bank (BB) has restricted formation of various committees by the boards of directors of banks and non-banking financial institutions (NBFIs), reports BSS. The central bank in a circular issued Wednesday said the boards of directors of the banks and NBFIs would constitute only an executive committee with maximum of five members to address urgent issues. The circular further said that there should not be any other permanent, temporary or subcommittee other than the executive committee and the existing audit committee. A BB official said the decision was taken against the backdrop of forming various types of committees by some banks and NBFIs that created confusion over the role and responsibilities of boards of directors, chairmen and the managing directors. The central bank in another directive issued on the same day expanded the areas of responsibilities of the audit committee to strengthen its capacity and performance in supervising the activities of the financial institutions. The directive gave a detailed guideline on the responsibilities of the committee in areas including overseeing internal management, publication of financial statement, internal and external audits and proper implementation of the rules and regulations. It said the three-year committee would have five members including a chairman and it would be selected by the boards of directors from among the experienced directors of the banks and NBFIs. The central bank said that the decision was taken in line with Internal Control and Compliance (ICC) Framework of the BB and to ensure a sound, effective and secure financial sector in the country. The BB earlier in July increased the number of audit committee members to five from three so the committee can work with more efficiency.