Dhaka, Bangladesh (BBN) – The central bank of Bangladesh on Wednesday amended its rules on appointment and removal of the chief executive officers (CEOs) of non-banking financial institutions (NBFIs) like commercial banks, prohibiting their sacking without its prior permission.

Under the amended rules, the authorities of NBFIs cannot force the CEOs to submit their resignation or cancel their appointment contract without prior approval from the Bangladesh Bank (BB), the country’s central bank.

The CEOs will have to inform the chairmen of the boards of directors of the respective NBFIs about the valid grounds for resignations a month before if they want to scrap appointment contracts voluntarily before the expiry of the agreement, according to a notification, issued by the central bank on Wednesday.

 As per the amendment, a copy of the notice will have to be submitted to the central bank at the same time. 

On the other hand, the same process will have to be followed by the boards of directors of the NBFIs if they want to terminate appointment contracts of the CEOs. 

In case of posts of CEO falling vacant, the NBFIs have been empowered to appoint their immediate subordinate officers as acting CEOs for maximum three months and inform the BB about the appointees.

The central bank is empowered to appoint an administrator to the NBFI if their management failed to hire the CEO within the stipulated timeframe.

The BB had taken the latest move against the backdrop of seeking job protection by the CEOs of NBFI’s so that their board of directors cannot remove or suspend them without prior approval from the BB.

Earlier on March 3 last, Asad Khan, chairman of Bangladesh Leasing and Finance Companies Association (BLFCA), sough their jobs protection like the commercial banks to ensure good governance in the sector. 

“We’ve amended the rules relating to appointment and removal of the CEOs of the NBFIs aiming to establish good governance in the sector,” a BB senior official told BBN in Dhaka.

Currently, 31 NBFIs are running their business across the country.

BBN/SSR/AD-26Mar15-10:17 am (BST)