B MirrorDesk:  The central bank has implemented stringent regulations regarding loans for bank directors. This new policy aims to promote good governance within the banking industry and enhance transparency in the credit system. It mandates that the loan accounts of bank directors and affiliated entities be reported to Bangladesh Bank annually in September. Under this policy, the loan amount for bank directors is capped at 50 percent of the bank’s paid-up capital, and any loan exceeding one crore taka requires prior approval from Bangladesh Bank. Additionally, loans taken anonymously by bank directors or related parties are also subject to these regulations. Furthermore, no bank is permitted to lend more than 10 percent of its Tier-1 capital to any individual or entity, whether separately or collectively. In cases of non-compliance with this limit, the bank’s board and Bangladesh Bank must be notified immediately, along with a corrective action plan. If loans surpass the established limits, Bangladesh Bank must be informed, and prior consent is necessary for directors seeking loans exceeding Tk 5 million or Tk 10 million.

New regulations for MDs and CEOs:

Banks are prohibited from granting unsecured loans or advances to the entities they oversee. The employee loan scheme will not extend to managing directors (MDs) and CEOs. Any waivers of interest or profits for MDs, CEOs, or their affiliates require approval from Bangladesh Bank. While credit cards may be issued to CEOs under the same conditions as general customers, prior notification to Bangladesh Bank is mandatory seven working days in advance. Stakeholders believe that the recent policy changes from Bangladesh Bank will eliminate anonymous or beneficiary loans to directors, fostering a more equitable and transparent banking environment. This initiative is expected to enhance governance and transparency in loan management, thereby boosting public trust in the banking system.