In an ideal scenario, ensuring the independence of a bank’s management from the influence of its board helps smooth execution of decisions in tune with the board’s policies, said Bangladesh Bank Governor Abdur Rouf Talukder recently.
Both the boards of directors alongside the chief executive officers play a very significant role in the banks’ overall performance, he said.
Talukder was addressing a “Twenty-first Nurul Matin Memorial Lecture on Ethics in Banking” at the Bangladesh Institute of Bank Management on Saturday.
The governor brought up the issue at a time when the management officials of banks are struggling to take decisions independently due to the intervention of directors.
Ethics and corporate governance are highly important in the operation of banks, he said, adding that some directors tend to think they own the banks.
Some delinquent directors have been involved in major scams that have been perpetrated in the banking sector in recent times, according to the central bank reports.
In a keynote speech, AKM Saiful Majid, chairman of the board of directors of Grameen Bank, said “bad” management in the banking industry of Bangladesh has given rise to unethical banking practices.
In Bangladesh, multiple incidences of banks failing in their operations have occurred over the past three decades due to unethical banking practices, he said.
Nurul Matin was born in 1928. He joined the research department of the State Bank of Pakistan in 1951 as an officer and, subsequently, was placed in the operational departments of the bank in 1963.
During his long banking career, Matin served in many senior positions, including secretary to the board of the State Bank of Pakistan, executive director of Equity Participation Fund, managing director and chairman of Bangladesh Shilpa Bank, and deputy governor of Bangladesh Bank.
He also worked as the director of the BIBM, which initiated this memorial lecture in 1998 to give a boost to the ethical values of bankers.
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