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Central bank sets new rules for fixing salaries, benefits of bank MDs
FE Report
2/3/2006
The Bangladesh Bank (BB) has introduced a new set of guidelines on fixation of salaries and other financial benefits for the chief executive officers (CEO) of the country's commercial banks.
"We have issued a new set of guidelines to ensure discipline in determining salary and other benefits of the CEOs of the banks," a BB senior official told the FE Thursday.
The central bank issued a circular in this connection Thursday and instructed the concerned officials of the banks to place the guidelines in the next meetings of their board of directors for consideration.
Under the new guidelines, the banks will have to consider their financial position, area of activities, volume of business and earning capacity as well as eligibility of the persons concerned, and salaries and allowances offered by similar other banks.
The banks also have to fix the gross salaries of the CEOs, known as managing directors (MDs), on the basis of basic salary, house rent and other allowances like provident fund, utility bills and leave-fare assistance with specified limits.
Besides, other facilities, including car, fuel and driver, should be converted in terms of cash and included in the salary proposal of the CEOs that will have to be submitted to the central bank for approval.
"All the salaries, allowances and benefits will have to be shown in terms of Taka in the proposal," the central bank said in its circular.
The circular also said the MDs will not be entitled to receive any other financial facilities like dividends, commissions, bonus and expenses incurred in clubs.
"The terms and conditions of the salaries should not be changed during the service period. But it will be renewable on the basis of performances of the concerned CEOs," the circular said, adding that a person having crossed 65 years of age cannot hold the position of a CEO.
The BB also asked the banks not to pay income tax against their respective CEO's salaries and other financial benefits.
An appointed CEO will have to pay income tax from his own source.
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