FIs to have one director each from sponsoring organisations

Financial institutions (FIs) will not be allowed to have more than one representative director on the board of directors from their sponsoring companies, according to the central bank directive issued on Wednesday.
Usually, such sponsoring companies appoint more than one representative on the board, in a bid to keep control over the activities of the FIs.
FIs include leasing, housing and similar other companies.
If anyone is already a sponsor director in any FI, there will be no representative director, the Bangladesh Bank (BB) notice said.
The BB also said any director of the finance company who is a natural entity representing shareholders on the board, will remain in the same position as no further representation will be allowed.
People aware of the development said the purpose of the BB directive is to strengthen the board of FIs.
Some FIs in the country have been facing a wide range of scams in recent years, prompting the BB to take such steps, CEOs of some finance companies told the FE.
jaismharoon@yahoo.com