Bangladesh Bank has recently introduced a new directive governing the appointment of Managing Directors (MDs) and Chief Executive Officers (CEOs) in banks, a move that has ignited intense debate and dissatisfaction across the country’s banking and financial sectors. Under the new regulation, top officials from Bangladesh Bank, the securities regulator (BSEC), and the insurance regulator (IDRA) are now eligible to assume MD or CEO positions in commercial banks.
However, eligibility comes with stringent conditions. Officials must possess a minimum of 25 years of experience within their respective regulatory bodies and must hold a first-class position within the second grade of the national pay scale. This ensures that only highly senior and experienced officers can be considered for these critical leadership roles.
Another significant change in the directive is the requirement that prospective MDs must have at least three years of experience in the roles of Deputy Managing Director (DMD) or Additional Managing Director (AMD). Previously, this period was only two years, and prior regulations imposed no such restrictions. The revision has left many seasoned bankers expressing concern, arguing that long-serving DMDs may be disqualified due to age limits, effectively benefiting only a narrow cohort of candidates. A senior DMD from a state-owned bank, speaking anonymously, described the move as “an ominous signal for the banking sector.”
Bangladesh Bank Executive Director and spokesperson Arif Hossain Khan defended the new stipulations, stating, “The mandatory three-year DMD–AMD experience is intended to ensure that an MD is fully prepared for the responsibilities of the position. If a regulatory official resigns from their post to join a bank as MD, conflicts of interest are effectively mitigated.”
Nonetheless, experts in the banking sector have cautioned that the policy may inadvertently create conflicts of interest. For instance, during an MD selection process, candidates from regulatory bodies could potentially receive preferential treatment from board members or colleagues due to prior professional connections.
The directive introduces a new dimension of challenges and perspectives to the sector. While former top regulators have previously served as commercial bank MDs, no formalised policy had existed until now. With its implementation, the recruitment process for bank leadership has taken on a more structured yet potentially contentious character, signalling both opportunity and caution for the financial industry.