The New Nation - Internet Edition

UNB, Dhaka

Bangladesh Bank yesterday issued a guideline to curb extra-spending by some financial institutions amid allegations they appoint chosen ones as adviser or consultant to give them extra benefits beyond service rules.

The additional spending reduces profit earnings of the companies, resulting in lower dividends to the shareholders, a senior Bangladesh Bank official told UNB.

As per the guideline, which comes into immediate effect, the financial institutions have been prohibited from giving the advisers or consultants any benefit beyond the consolidated monthly pay or onetime payment.

BB officials said the advisers or consultants, whatever may be their status, were receiving extra facilities including car, entertainment allowance, phone and fax. The FIs were spending huge amount of money for them. The central bank also prohibited former chairmen, directors and chief executive officers or managing directors of the FIs concerned to be appointed as the advisers or consultants of their former institutions.

"This is to ensure good governance in the FIs," said the BB circular. Officials said such advisers/consultants were being involved in the day to day company affairs and even influencing important decisions.In some cases, they said, former chairmen appointed as advisers were performing the responsibility of the company chairmen while the former CEOs/MDs discharging the duties of the CEOs.

"The scope of work for advisers must be specific. They should not be involved in the company affairs beyond the specific assignment. They will not exercise any sort of power in the regular affairs of the company, nor involve in any decision making process."

Bangladesh Bank also advised the FIs to avoid appointing advisers or consultants as best as possible if the jobs could be done with their regular employees.

It, however, allowed the Fis, subject to prior approval of the respective board of directors, to appoint advisers or consultants for a maximum period of two years for specialized jobs relating to tax, law and legal cases, engineering and technology, information technology and introduction of financial instruments.

If the FIs appoint advisers or consultants, they would have to inform Bangladesh Bank and send their resumes and specific assignment within seven working days from the appointment.