Banks can now spend more on business centres

Bangladesh Bank (BB) today introduced comprehensive guidelines on the establishment, relocation, rent/lease, and contract renewal of bank business centres, raising the cost ceiling.

BB issued the new guidelines on the day.

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For the establishment of a new business centre, the maximum expenditure ceiling—excluding IT equipment and air-conditioning systems—has been increased to Tk 2,200 from Tk 2,000 per square foot on a cumulative basis, according to the guidelines.

In the case of relocating an existing business centre, the maximum expenditure ceiling has been raised to Tk 1,600 from Tk 1,400 per square foot.

Expenditure on IT equipment and air-conditioning systems must also remain within reasonable and justifiable limits.

Previously, there were no comprehensive guidelines on this issue; only a circular was in place.

Under the new guidelines, banks have been authorised to establish several types of business centres, including airport lounges, without obtaining prior approval from the central bank, which was previously required.

Banks will no longer be required to obtain prior approval from Bangladesh Bank to establish such lounges. A decision by the bank's board of directors will be sufficient.

However, if a bank violates any of the conditions stipulated in the guidelines for establishing and operating a lounge, Bangladesh Bank will have the authority to impose sanctions, including prohibiting its operation, the guidelines said.

The installation of electronic booths, such as automated teller machines (ATMs), cash deposit machines (CDMs), cash recycler machines (CRMs), and financial kiosks, is encouraged, as they expand digital transaction facilities and reduce reliance on cash transactions.

Banks will also no longer be required to obtain prior approval from Bangladesh Bank to establish such electronic booths. Approval from the respective bank's board of directors will be sufficient.

However, banks must notify Bangladesh Bank within 15 days of installing the booths in the prescribed format.

The guidelines also cap the maximum floor area of SME support centres, service centres, sales centres, and unit offices at 1,000 square feet.

At least 50 percent of newly approved branches and sub-branches must be located in rural areas. Applications for urban branches will not be considered if the rural target is not met.

Rental contracts must have a minimum tenure of six years and a maximum tenure of 20 years. Rent escalations are capped at a maximum of 15 percent after at least three years, according to the guidelines.