Banks can rent branch space without BB approval

Banks can now rent office space for branches and other business centres without prior approval from the central bank, provided the rent remains within a maximum limit.

According to a Bangladesh Bank (BB) circular issued yesterday, banks operating in Bangladesh can decide on renting or leasing premises for business centres, signing new agreements, and renewing existing contracts with the approval of their own boards of directors, without seeking prior permission from the regulator.

However, the provision will apply only if the rent remains within the maximum limit specified by the central bank, depending on the location.

Under the revised ceiling, the maximum rent per square foot has been fixed at Tk 104 in Dhaka, Tk 61 in Chattogram, Tk 34 in Rajshahi, Tk 40 in Sylhet, Tk 34 in Khulna, Tk 45 in Rangpur, Tk 48 in Barishal, and Tk 36 in Mymensingh for locations within city corporation areas.

For municipalities and rural areas, the rent ceilings are lower.

Banks must inform the central bank within 10 working days of signing any rental agreement under this provision, the circular said, adding that the move aims to simplify and speed up the process of establishing or relocating bank business centres, as the number of branches and relocations has increased in recent years.

Prior approval from the central bank will still be required in several situations, including when the rent exceeds the specified ceiling, when there is a conflict of interest between the building owner and bank directors or related parties, when a branch is relocated before the expiry of an existing rental contract, and when premises are rented for the bank’s head office or its controlling departments.

The circular also instructed banks to follow the relevant provisions of the Bank Company Act when establishing or relocating business centres.