Corporate Governance Report

Table of Contents
1.0 Introduction ................................................................................................................................. 3

1.1 Objectives of the Study ..................................................................................................................... 3
1.2 Methodology of the Study ................................................................................................................ 3
1.2.1 Sources of Data: ......................................................................................................................... 3
1.3 Data Analysis .................................................................................................................................... 4
1.4 Limitation of the Study ..................................................................................................................... 4
2.0 Overview of Corporate Governance ........................................................................................... 4
2.1 Definition of corporate governance by authors............................................................................. 4
3.0 Literature Review.............................................................................................................................. 5
4.0 An overview of corporate governance practices of public sector organizations in developing
countries ................................................................................................................................................ 10
5. Corporate Governance in Financial Enterprises in Bangladesh ........................................................ 12
5.1 Corporate Governance - Best Practices and Guidelines ............................................................. 13
5.1.1 Public Limited Company – Non Financial Institutions........................................................ 13
5.1.2 Public Limited Company – Financial Institutions ............................................................... 15
6.0 Corporate Governance of Agrani Bank .......................................................................................... 19
6.1 A Brief Overview of Agrani Bank .............................................................................................. 19
6.2 Status of Compliance Requirement of Bangladesh Bank’s guideline for Corporate Governance
BRPD circular no 16 dated 24.07. 2013 ........................................................................................... 19
6.3 Shareholders’ Right, Ownership, Roles and Structure................................................................ 26
6.4 Board of Directors of Agrani Bank ............................................................................................. 27
6.4.1 Director Selection policy and Independent Directors .......................................................... 28
6.5 Role of the Board of Directors .................................................................................................... 28
6.6 Directors’ Statement of Responsibilities..................................................................................... 29
6.7 Management Rights, Roles and Authorities................................................................................ 31
6.8 Roles and Responsibilities of Management ................................................................................ 32
Processes and Strategy: ..................................................................................................................... 32
7. Corporate Governance of Dutch Bangla Bank Limited .................................................................... 33
Corporate Governance in DBBL....................................................................................................... 34
7.1 Shareholders ............................................................................................................................ 34
7.2 Board of Directors....................................................................................................................... 36
7.2.1 The Board and their responsibilities .................................................................................... 36
7.2.2 Key objectives of the Directors ............................................................................................ 37
7.2.3 The Committees of the Board of Directors .......................................................................... 37
Corporate Governance
7.3 Management ................................................................................................................................ 37

7.3.1 Duties & Responsibilities of a management at DBBL ......................................................... 37
Accurate Reporting of Finances and Data ........................................................................................ 38
Plan and Coordinate Day to Day Operations .................................................................................... 38
7.3.1 Management benefits and compensation ...................................................................... 39
8.0 Corporate Social Responsibility...................................................................................................... 41
8.1 Corporate Social Responsibilities of Agrani Bank Limited ........................................................ 41
8.2 Corporate Social Responsibilities of Dutch Bangla Bank Limited ............................................. 46
9. Analysis and findings ........................................................................................................................ 49
9.1 Challenges of management of Agrani Bank ............................................................................... 49
9.2 Problems and challenges Faced by a management of DBBL ..................................................... 50
10. 0 Comparison between Corporate Governance and CSR of Agrani bank and DBBL .................... 51
11. Recommendations and Implications: .............................................................................................. 52
12.0 Conclusion .................................................................................................................................... 52
13.0 References ................................................................................................................................. 53
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1.0 Introduction
Corporate governance broadly refers to the mechanisms, processes and relations by which
corporations are controlled and directed. Governance structures identify the distribution of
rights and responsibilities among different participants in the corporation such as the board of
directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders. We
have selected a private and a public bank named Agrani bank and Dutch Bangla Bank
Limited for the analysis of the corporate governance. We have also analyzed board of
directors, management and shareholders part as well as CSR of these two banks and found
some key credentials.
1.1 Objectives of the Study

The objectives of the study are as follows:
a) To know about Corporate Governance in Bangladesh

b) To know about Corporate Governance of Agrani Bank and Dutch Bangla Bank
Limited
c) To Know about the CSR of the selected bank
d) To analyze corporate governance of the selected banks
e) To find problems and recommendations if needed
1.2 Methodology of the Study
1.2.1 Sources of Data:

Secondary sources of information have been collected for the purpose of this report.
 Annual report of Dutch Bangla Bank Limited and Agrani bank.
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 Periodicals published by the Bangladesh Bank.

 Various books, journal, articles, website etc
 Different publications regarding CSR and Corporate Governance
1.3 Data Analysis

Data is analyzed based on theoretical basis.
1.4 Limitation of the Study

The following limitations are apparent in the study:
a) Only secondary data collection

b) Unavailability of sufficient books, journals, articles and publications.
c) Limited knowledge regarding this study.
d) Privacy issue.
2.0 Overview of Corporate Governance

Corporate governance is the set of laws, policies and procedures, and institutions affecting
the way a corporation is directed, administered and controlled. It also includes the
interrelationship of the stakeholders, i.e., shareholders, management, and the board of
directors, employees, suppliers, customers, banks and other lenders, regulators, the
environment and the community at large. Many contemporary organizations continuously
seek for ways to improve on their activities. This explains why concepts such as business
process improvement, re-engineering, total quality management, strategic management,
corporate citizenship, corporate social responsibility (CSR) and business ethics have become
buzzwords in the contemporary business world. This paper focuses on corporate governance
which is an important aspect of private and public organizations.
2.1 Definition of corporate governance by authors

It is difficult to define the concept of corporate governance in a universally acceptable way
because definitions vary from country to country. Moreover, countries differ from each other
in terms of culture, legal systems and historical developments (Ramon, 2001). This explains
why there is a wide range of definitions of the concept of corporate governance.
Shleifer and Vishny (1997) define corporate governance in terms of the ways in which
suppliers of finance to a firm assure themselves of a good return to their investment. This
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definition is shallow in that it emphasizes the suppliers of finance and it does not recognize
the relationships between a firm’s stakeholders and managers. Each firm has numerous
stakeholders whose different interests must be taken care of. This is why corporate
governance has also been referred to as a collective group of people united as one body with
the power and authority to direct, control and rule an organization (Ruin, 2001).
The Australian Standard (2003) defines corporate governance as the process by which
organizations are directed, controlled and held to account. This implies that corporate
governance encompasses the authority, accountability, stewardship, leadership, direction and
control exercised in the process of managing organizations. Since this definition recognizes
the need for checks and balances in the process of managing organizations, it can be
considered to be more comprehensive (Gregory, 2000). Moreover, it is similar to the
definitions provided by the Audit Commission (2009) and
CIPFA/SOLACE (Chartered Institute of Public Finance and Accountancy and the Society of
Local Authority Chief Executives 2007) emphasizes on the core aspects of accountability and
control in the governance of organizations.
According to Turnbull (1997) corporate governance influences all activities of firms that
produce goods or provide services. Colley et al. (2004) opine that corporate governance is the
act or process of governing while Cadbury (2000) defines corporate governance in terms of
the systems by which firms are directed and controlled. The presence of different definitions
indicates that each author formulates a definition that spins around his or her theme (Demb &
Neubauer, 1992). In fact, Wallace and Zinkin (2005) point out that the term good corporate
governance is easy to phrase but difficult to understand and appreciate.
3.0 Literature Review

McNutt (2010) argues that the concept of governance has been applied in both economics and
law for centuries and it has been understood to mean enforcement of contracts, protection of
property rights and collective action. In fact, governance is associated with people operating
within organizations. Organizations allow for achieving outcomes beyond the reach of a
single person (Scott, 2003). Nevertheless, organizations must be governed properly in order
for them to achieve their objectives. The concept of corporate governance began to be used
and spoken about more commonly in the 1980s (Parker, 1996) but it originated in the
Nineteenth Century when incorporation was being advocated for as a way of limiting liability
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(Fletcher, 1996; Vinten, 2001). Adams (2002) perceives creation of the registered company
to be the real starting point for any discussion on corporate governance. The Joint Stock
Companies Act 1844 (UK) supported the registration of companies. The rise of modern
corporations led to a separation of control from ownership ((Berle & Means, 1967). This
separation meant that owners of firms no longer controlled the firms’ actions because that
was the role of professional managers (Kiel & Nicholson, 2003). This gave rise to the need
for corporate governance frameworks to protect owners of firms from the actions of
professional managers. As a matter of fact, the Limited Liability Act 1855 (UK) was passed
to protect shareholders from debt beyond their investment.
According to Francis (2000) the concept of corporate governance gained prominence in the
1980s because this period was characterized by stock market crashes in different parts of the
world and failure of some corporations due to poor governance practices. Corporate collapse
was the predominant driver for change to corporate governance codes (United Nations,
1999). As more corporate entities in different parts of the world collapsed in 1980s, there was
a change of attitude with much higher performance expectations being placed on
management boards of firms. There was also a growing realization that managers are to run
firms while boards are to ensure that firms are run effectively and in the right direction
(Adams, 2002). Directors and managers require different sets of skills and managers do not
necessarily make good directors. Prevention of corporate failure was not the only reason that
led to adoption of the corporate governance ideals. On a positive note, there was a growing
acknowledgement that improved corporate governance was crucial for the growth and
development of the whole economy of a country (Clarke, 2004; Department of Treasury,
1997). Other studies established strong links between the performance of corporations and
the governance practices of their boards (Gregg, 2001; Hilmer, 1998; Kiel & Nicholson,
2002; OECD, 1998). Moreover, a study carried out in the United States by Gompers, Ishii
and Metrick (2003) found a strong correlation between good corporate governance practices
and superior shareholder performance. The study also revealed that two-thirds of investors
were prepared to pay more for shares of companies that had good corporate governance
practices. Nevertheless, Cutting and Kouzim (2000) did not find any significant relationship
between the performance of firms and the governance practices of their boards.
A number of studies on the state of corporate governance in Bangladesh were undertaken

before the arrival of the corporate governance guidelines of Security Exchange Commission
(SEC). All these studies concluded that corporate governance (CG) practices in companies
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and organizations were poor and that Bangladesh had lagged behind its neighbors and the
global economy in corporate governance (CG).
Studies have discovered number of reasons for malpractices of corporate governance (CG) in
companies listed with the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange
(CSE). One of the principal reasons for poor corporate governance (CG) is that most of the
listed companies are family oriented (Ahmed and Yusuf, 2005) and these companies prefer to
keep ownership holdings within the family connections (The Daily Star, May 17, 2006), i.e.,
these companies are closely held. As a result, small group of shareholders own or control the
majority of shares and by using that majority, control the decision-making processes of the
companies (Bangladesh Enterprise Institute 2003). “In an overwhelming majority of the non-
bank listed companies, sponsor shareholders, who generally belong to a single family,
heavily dominate the Board of Directors. The Board of Directors is actively involved in
management. Most independent directors represent current or former government officials or
bureaucrats. They are appointed directors to assist company in getting licenses or as payback
for previous favors” (Ahmed and Yusuf, 2005). In the context of Bangladesh, independent
directors do not act as an advocate of majority shareholders or as a source of innovative ideas
(Bangladesh Enterprise Institute 2003). But ironically, the companies Act 1994 provides for
many stringent rules regarding any negligence, default, breach of duty or trust on the part of
director, manager or officer of a company. But these rules are “more honored in the breach
than observance” (Ahmed and Yusuf, 2005). In addition to this, annual general meetings
(AGM) of many listed companies are not held in time, which also implies poor corporate
governance (CG) practice.
Ahmed and Baree (2000) summarizes the principles and standards of corporate governance as
agreed and put forth by Organization for Economic Co-operation and Development (OECD) ,
Cadbury committee (UK) and other international committees. The authors identified
problems of implementing international corporate governance norms in Bangladesh and
finally make certain recommendations for reform of corporate governance as well. The article
recommends three substantive actions be taken to improve corporate governance scenario in
Bangladesh. First, a ‘high powered committee’ including members from government,
regulatory agencies, companies and ICAB should write a code for corporate governance in
Bangladesh. Second, amendments to existing laws should be adopted to enforce corporate
governance norms. Third, academic and professional institutions should include corporate
governance principles in their syllabus.
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Sarkar and Ahmed (2007) depicted the scenario of corporate governance disclosure by listed
public limited companies in Bangladesh. They identified some information items which
companies tend to disclose much such as ‘disclosure of remunerations committee’. They
observed that there are some information items, which companies tend to disclose less or try
to conceal purposively, such as ‘stock code’. They observed that 25 companies out of total
257 companies as listed on DSE up to June 30, 2005 reported Corporate Governance Report
in the annual reports voluntarily. The mean disclosure of corporate governance items is 40.84
percent. Sarkar, Khan and Alam (2007) studied the response rate of different companies
(industry-wise) with a special reference to the SEC corporate governance guidelines and the
compliance rate for corporate governance guidelines by the companies who have reported the
compliance with such guidelines in 2005-06 and 2006.
A comprehensive diagnostic study was conducted by Bangladesh Enterprise Institute (2003)

as a project, which seeks to focus on the key areas that have been identified internationally as
important to good corporate governance.
Weak regulatory system has also been identified as a roadblock in the way of achieving
sound CG. The existence of weak regulatory system prevents the current laws and statutes
from being implemented.
Incompleteness of Board committees hinders good CG in Bangladesh. Board committees

which are very important for sound CG are composed of Audit Committee, Remuneration
Committee, Nomination Committee. The Audit Committee monitors the integrity of financial
statements, reviews internal financial controls, recommends appointment of external auditors
and reviews auditor independence and objectivity and audit effectiveness. The Remuneration
Committee is responsible for reviewing the remuneration of directors and senior management
and advising the
Board whether the amounts are reasonable in comparison with industry and corporate
yardsticks. The Nomination Committee is responsible for proposing new nominees to the
Board and advising the Board on the core competence required of new directors (Michael
Seamer, 2002). Despite significant importance of the Board committees, new boards (except
of banks) have been found to have audit committees and almost none has been found to have
nomination or remuneration committees in Bangladesh (BEI, 2003).
Discrepancy between International Accounting Standards (IAS) and Bangladesh Accounting

Standards (BAS) and inconsistency between the Companies Act, 1994 and IAS are other
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factors, which have been found to be responsible for poor CG practices. The Institute of
Chartered Accountants of Bangladesh (ICAB) adopted 30 IAS as BAS but subsequent
amendments of these BAS were not made and consequently, BAS significantly differ from
IAS in material aspects. The situation aggravates when provisions regarding preparation and
presentation of financial statements, disclosures and auditing that are mentioned in the
Companies Act, 1994 are incompatible with IAS, which are required by the SEC. The
Companies Act, 1994, for example, does not require the preparation and presentation of a
consolidated Balance Sheet for a holding company, but it is required under the IAS.
In order to improve the present situation and to raise the awareness of the need for good CG
practices, a number of initiatives have been taken at the non-governmental level. The
establishment of the Center for Corporate Governance and Finance Studies (CCGFS) at the
University of Dhaka is one of the examples of the most recent initiatives. The CCGFS, DSE,
the OECD and the Asia Foundation jointly organized an international conference on
corporate Governance on July 30 and July 31, 2005 for the first time in Bangladesh. The
Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) organized another
conference on the same topic. The Task Force on Corporate Governance of Bangladesh
Enterprise Institute (BEI) undertook a project supported by Department for International
Development, World Bank and the OECD and developed the “Code of Corporate
Governance for Bangladesh” in April, 2004.But at the government level, the SEC has made
the most important move by issuing the corporate governance guidelines on February 20,
2006 and making them mandatory on the listed companies on “comply or explain” basis.
The Dhaka Chamber of Commerce and Industry (DCCI) has been implementing a project,
entitled Economic Reform and Research Enterprise, in co-operation with The Center for
International Private Enterprise (CIPE)- an affiliate of the US Chamber of Commerce,
Washington D.C. Haque, Jalil and Naz (2007) studied that one of the objectives of this
project is
to prepare economic policy papers on selected business sectors. DCCI requested to prepare a
paper on “Principles of Corporate Governance for Public and Private Enterprise in
Bangladesh.” According to the Term Of Reference (TOR) the scope of the study was limited
to analyze the situation of corporate governance in the three types of Enterprises: Public
limited companies- Financial and Non-Financial institutions and State Owned Enterprises
(SOE).
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4.0 An overview of corporate governance practices of public sector organizations in

developing countries
Effective and efficient management of public sector organizations is an issue of concern in
many countries. Public sector organizations are increasingly being held more accountable for
their performance and are therefore expected to operate efficiently and effectively. This
means that public sector organizations have to search for ways to improve on their activities.
Notable approaches include the use of performance contracts. Similarly, activity based
management practices can increase transparency and efficiency when conducting government
activities thereby assisting public sector organizations to achieve their objectives.
Historically, some public sector enterprises were formed to create employment for large
numbers of people. However, in recent years, public sector management has become
increasingly results and customer-focused.
This can be partly attributed to a growing unwillingness among many communities and
governments to accept the continuation of historic commitments simply because they are
historic. Some countries have also noticed diminishing differences between the private and
public sectors. For instance, private sector organizations are now expected to take more social
responsibility measures while the public sector is witnessing the need to focus on customers
and to justify their existence. The contemporary business environment pays great attention to
target, measurement, accountability, productivity gains and the continued relevance and value
of specific activities or programs. The proper management of public sector organizations is
therefore an issue of concern in developed and developing countries.
It has been noted that the concept of governance has existed for centuries. However, many
African economies began to pay particular attention to the ideals of good governance in the
beginning of the 1980s. According to Qudrat-I Elahi (2009), the term good governance was
first mentioned in a 1989 World Bank report on Sub-Saharan Africa but since the 1990s
many donor agencies have sought the pursuit of good governance. Currently, corporate
governance is a buzzword in the business world.Corporate governance systems have evolved
in a number of developing African countries.
The concept of corporate governance is not necessarily the best solution for developing
economies. This is because a number of developing countries face numerous problems that
include unstable political regimes, low per capita incomes and diseases. Such problems
require more elaborate solutions than simply adopting corporate governance concepts.
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Moreover, there is a general lack of research in corporate governance practices in developing

countries, especially countries in the African continent.
This lack of research can be attributed to the fact that, for a long time, the issue of corporate
governance did not receive adequate attention in the developing world. Historically the
ability of managers to run organizations was never questioned. Consequently, there was little
concern for corporate governance or information disclosure and transparency. That situation
has changed and the concept of corporate governance is currently acknowledged to play an
important role in the management of organizations in developing economies.
Developing countries are often faced with a multitude of problems that include uncertain
economies, weak legal controls, protection of investors and frequent government
intervention. These problems make it even more necessary for developing countries to adopt
effective corporate governance structures. The pressures of an increasingly globalized world
economy, democratization, IMF/World Bank’s economic reforms and the recent financial
scandals in the West have forced a number of developing countries to adopt the corporate
governance ideals. It has also been suggested that improved corporate governance systems
can serve as an incentive for attracting foreign investment .In fact; it is poor economic
performance and high international debt levels in emerging markets that forced the World
Bank, IMF, and the IFC to intervene in an effort to improve the corporate governance
systems of these markets.
A number of developing countries have embraced the corporate governance ideals. However,
developing countries practice corporate governance models that are different from the models
adopted by developed countries. This is partly due to the unique economic and political
systems found in developing countries.
Developing countries are poorly equipped to implement the type of corporate governance
found in the developed market economies because developing countries are characterized by
state ownership of firms, interlocking relationships between governments and financial
sectors, weak legal and judiciary systems and limited human resource capabilities.
Corporate governance structures in developing countries are weak. Consequently, several

measures have been suggested on how to improve such structures. Notable suggestions
include the use of equity instead of debt for growth, increasing overall investor confidence
through increased transparency, strengthening of capital market structures and encouraging
the use of competition to improve performance of domestic firms.
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The concept of competitions as a way of encouraging improvements in productivity has been

adopted in many parts of the world .Competitions mainly involve rewarding firms that excel
in stated areas and they can be administered at a national level. Firms that have adopted total
quality management (TQM) ideals often use the Malcolm Baldrige framework as a quality
control tool for their activities.
5. Corporate Governance in Financial Enterprises in Bangladesh

As in many developing countries, banks play a vital role in Bangladesh economy, as the
dominant financier for the industrial and commercial activities. Since the independence in
1971, the government until 1982, when the ‘ownership reform’ measures started in the
financial sector, had carried out the regulation and ownership of all the financial institutions.
During the reform period, two out of six National Commercial Banks (NCBs) were
denationalized and private commercial banks were allowed to operate in the country. In 2003,
out of the 49 banks operating in Bangladesh, 9 belong to the public sector, 30 are local
private and 10 are foreign owned banks (Bangladesh Bank, 2003).
Despite the expansion, the operational efficiency of the banking institutions has continued to
be dismal (Sayeed, 2002; Raquib, 1999). The sector witnessed decreasing profitability,
increasing non-performing assets, provision and capital shortfalls, eroded credit discipline,
rampant corruption patronized by political quarters, low recovery rate, inferior asset quality,
managerial weaknesses, excessive interference from government and owners, weak
regulatory and supervisory role etc (Hassan, 2004; USAID, 20055). Internal control system
along with accounting and audit qualities are believed to have been substandard (World
Bank, 2008; Raquib, 2009; CPD, 2011). Many of the problems have been attributed to lack of
sound corporate governance among the banks. The reports by the Banking Reform
Commission (2009) and BEI (2013) raises serious concerns on the banking sector and
criticize the quality of governance that prevails in the banking sector in Bangladesh, which
provides an impetus to explore the governance issues.
Corporate Governance in State-Owned Enterprises in Bangladesh
In many developing countries, the state remains a significant owner of commercial

enterprises that operate in comparative markets. State ownership includes businesses in
several sectors, notably utilities and infrastructure, with energy, transport and
telecommunication being usually the most important business. State Owned Enterprises have
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an undeniable capacity to deliver a positive contribution to the economy of a country,

provided they are well managed and good management is built on strong foundations of good
governance. State Owned Enterprises, like any company, have a body of shareholders that the
directors and management are accountable to, the only difference is that in this instance the
shareholder happens to be government via a ministry.
State Owned Enterprises face specific difficulties regarding their governance. These
governance difficulties derive from a number of characteristics that may be more or less acute
depending on countries’ administrative traditions, the recent state sector reforms and the
degree of liberalization of the economies concerned. In order to grasp the specificity of SOE
governance one should keep in mind the following two issues:
5.1 Corporate Governance - Best Practices and Guidelines
5.1.1 Public Limited Company – Non Financial Institutions

In practice, corporate governance and monitoring mechanism recently focused on matters like
the composition of the Board of Directors, the duties and responsibilities of the executive
directors, regular monitoring by shareholders, voting rights of shareholders and detailed
disclosure of company information that are material for decision making by interested parties.
The guideline that good corporate governance frameworks project and facilitate is the
exercise of shareholders’ rights. Shareholders should have right to participate in, and to be
sufficiently informed on, decisions concerning fundamental corporate changes. The equitable
treatment of all shareholders, including minority and foreign shareholders should be ensured
by corporate governance also. Stakeholders, including individual employees and their
representative bodies, should be able to freely communicate their concerns about illegal and
unethical practices to the board and their rights should not be compromised for doing this.
Another important responsibility of corporate governance is time and accurate disclosure of
all matters regarding the corporation. Information should be prepared and disclosed in
accordance with high quality standards of accounting and financial and non-financial
disclosures. Board members should act on fully informed basis, in good faith, with due
diligence and care, and in the best interest of the organization and shareholders.
The board of Directors is the central entity in a functioning corporate governance system,
since it is the governing body of any organization. The board is accountable to the
shareholders and/or stakeholders of the organization. To meet its organizational objectives
the board must provide strategic policy and directions to the management, but should not
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involved in day-to-day operational decisions. Management is accountable to the board, and

therefore information systems that provide relevant, transparent, and material information to
the board are imperative. (The Code of Corporate Governance For Bangladesh, Mar 2014,
BEI).
The board size should be optimal with diverse expertise and experience to ensure a well
functioning and involved board. BEI guidelines states that ideally internationally successful
corporate boards have memberships of 7 to 15 directors. BEI also stresses the need for
mandatory retirement by rotation of 20% of the board; and the vacancies to be filled at the
AGM. SEC in the their notification dated 20th March 2006 in order to enhance corporate
governance in the interest of investors and the capital market, imposes the some further
conditions to the companies listed with any stock exchange in Bangladesh. These conditions
are imposed on ‘comply or explain’ basis. The companies listed with any stock exchange in
Bangladesh should comply with these conditions or shall explain the reasons for non-
compliance. Board size propose by SEC is not be less than 5 (five) and not more than 20
(twenty). Cadbury report, Sarbanes-Oxley Act, BEI, SEC and other major works on CG also
emphasizes on the importance of independent directors in the board. All companies should
encourage effective representation of independent directors on their Board of Directors so
that the Board, as a group, includes core competencies considered relevant in the context of
each company. For this purpose, the companies should comply with at least one tenth (1/10)
of the total number of the company’s board of directors, subject to a minimum of one, should
be independent directors. According to SEC “Independent Director means a director who
does not hold any share in the company or who holds less than one percent (1%) shares of the
total paid-up shares of the company, who is not connected with the company’s promoters or
directors or shareholder who holds one percent (1%) or more than one percent (1%) shares of
the total paid-up shares of the company on the basis of family relationship; who does not
have any other relationship, whether pecuniary or otherwise, with the company or its
subsidiary/associated companies, who is not a member, director or officer of any stock
exchange, and who is not a shareholder, director or officer of any member of stock exchange
or an intermediary of the capital market.” The independent director(s) should be appointed by
the elected directors.
Few other guidelines and best practices on corporate governance which receive considerable
emphasize are:
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• The position of the Chairman of the Board and CEO should be filled by different
individuals.
• A company should appoint Chief Financial Officer (CFO), a Head of Internal audit and a
Company Secretary.
• A company should have an audit committee as a subcommittee of the board.
• Directors, in the Annual Report, should give representation of the true and fairness of
accounts, compliance with accounting standard and proper internal control.
5.1.2 Public Limited Company – Financial Institutions

Given the important financial intermediation role of banks in an economy, their high degree
of sensitivity to potential difficulties arising from ineffective corporate governance and the
need to safeguard depositors’ funds, corporate governance for banking organizations is of
great importance to the international financial system and merits targeted supervisory
guidance. The Basel Committee on Banking Supervision published guidance in 2009 to assist
banking supervisors in promoting the adoption of sound corporate governance practices by
banking organizations in their countries. This guidance drew from principles of corporate
governance that were published earlier that year by the Organization for Economic Co-
operation and Development (OECD) with the purpose of assisting governments in their
efforts to evaluate and improve their frameworks for corporate governance and to provide
guidance for financial market regulators and participants in financial markets. Banking
companies pose unique corporate governance attention as they differ greatly with other types
of firms in terms of broader extent of claimants on the banks assets and funds. A group of
entrepreneurs and/or executives could set up a banking business by putting very little equity
from their own pocket as the nature of business itself guarantees flow of enormous amount of
funds in the form of deposits. The general approach to corporate governance argue in favor of
the shareholders rights only, as managers/executives may not always work in the best interest
of the shareholders (Henderson, 1986; Jensen and Meckling, 1976; Fama and Jensen, 1983).
But the shareholders actually account for a very tiny portion of the bank’s assets and funds.
Rather almost every bit of banks’ investments are financed by the depositors’ funds. In case
of losses or failures it will be depositors’ savings that the banks would lose. Such risks
demand priority in protection of depositors that ushers in broader view o corporate
governance that suggests the interest and benefits of the suppliers of funds for a firm should
be upheld (Shliefer and Vishny, 1997; Vives, 2000; Oman, 2001). Macey and O’Hara (2001)
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also argue that a broader view of corporate governance should be adopted in the case of
banking institutions, arguing that because of the peculiar contractual form of banking,
corporate governance mechanisms for banks should encapsulate depositors as well as share
holders. Arun and Turner (2003) supported the need for the broader approach to corporate
governance for banking institutions and also argue for government intervention to restrain the
behavior of bank management. In many countries, deposit insurance is used as a mechanism
to safeguard the banking system as well as the depositors. However, Macey and O’Hara
(2001) argues that in many instances, the presence of deposit insurance mechanism by the
governments may encourage many bank insiders to embark upon self-benefiting risky deals
taking the advantage of insurance protection. The self-dealing activities by the bank insiders
are very dangerous to the performance and survival of the banks as scores of previous bank
failures have been caused by risky self-dealing by the bank insiders (Jackson and Symons,
1999; Clarke, 1988). The presence of heavy liquid assets and potential lack of depositors’
interest to actively control and monitor banks’ risky decisions as a result of the insurance
guarantees simplifies and aggravates the sharking in the banking firms. Banks in developing
countries are faced with high risk of sharking as a result of heavy government ownership,
lack of prudential regulation, weak legal protection and presence of special interest groups
((BCBS, 1999; Arun and Turner, 2003). The independent regulatory agencies are important
in developing countries to act against the frequent collusion among government, businesses
and bankers to serve special interest groups (Shleifer and Vishny, 1997; Arun and Turner,
2002). However, there is an argument that active role by regulators may cause problems as
well, as regulators may not have a convincing/sufficient motivation to monitor the banks as
they do not have much at stake in case of bank failures (Macey and Garrett, 1988). Recently,
the financial markets of developing economies have experienced rapid changes due to the
growth of wider range of financial products. As a result of this, banks have been involved
with high risk activities such as trading in financial markets and different off-balance sheet
activities more than ever before (Greuning and Bratanovic, 2003), which necessitates an
added emphasis on quality of corporate governance of banks in developing economies.
Asian Roundtable on Corporate Governance (ARCG) Task force developed the Policy Brief
on Corporate Governance of Banks in Asia (June 2006). The main issues and priorities for
reforms in CG of banks in Asia that were identified are:
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 The responsibility of individual board members – fiduciary duties of bank’ board

members, need of skills, personal abilities, training programs on integrity and
professionalism.
 The roles/functions of the board – guiding, approving and overseeing strategies/policies
rather than being immersed in day-to-day operations. Creating clear accountability lines
and internal control systems. Sufficient flows of information and managerial support.
 The composition of the board – banks are more encouraged to have independent directors
than other firms. Separation between Chairman and CEO.
 The committees of the board – audit committee, the Risk Management Committee, The
Governance Committee with combined responsibilities of Nomination, remuneration,
succession planning, training, performance evaluation, etc.
 Preventing abusive related party transactions – inspection of the existing firewall.
Creation of specialized committee to monitor and approve related part. transaction.
Publicly disclose such transaction.
 Bank holding companies and groups of companies holding banks – a bank’s parent
company should not impede the full exercise of the CG of the bank within the banking
group.
 Disclosure – effort on convergence into international standards on accounting, etc. should
be encouraged.
 Bank’s autonomy in relation to the state – state as owner should respect the legal
corporate structures of State Owned Commercial Banks (SOCB).
 Bank’s monitoring of the CG structure of its corporate borrowers – Extent to which banks
should assess/monitor CG of their corporate borrowers or seek to improve it.
State-Owned Enterprises (SOE)
Organizations for Economic Co-operation and Development (OECD) guidelines for State
Owned Enterprises are:
 Ensuring an Effective Legal and Regulatory Framework for State Owned Enterprises:
The legal and regulatory framework for State Owned Enterprises should ensure a
level-playing in markets where State Owned Enterprises and private sector companies
compete in order to avoid market distortions.
 The State Acting as an Owner: The state should act as an informed and active owner
and establish a clear and consistent ownership policy, ensuring that the governance of
17 | P a g e
SOE is carried out in a transparent and accountable manner, with the necessary degree
of professionalism.
 Equitable Treatment of Shareholders: The state and SOE should recognize the rights
of all shareholders and ensure equitable treatment and equal access to corporate
information.
 Relations with Stakeholders: The state owner ship policy should fully recognize the
SOE responsibilities towards stakeholders and request that they report on their
relation with stakeholders.
 Transparency and Disclosure: SOE should observe high standards of transparency.
 The Responsibilities of the Board of State-Owned Enterprises: The boards of SOE
should have the necessary authority, competencies and objectivity to carry out their
function of strategic guidance and monitoring of management. They should act with
integrity and be held accountable for actions.
− Firstly, SOEs are often effectively protected from two major threats that are
essentials in policing management behavior in public corporations i.e. the
threat of takeover and bankruptcy.
− Secondly, accounting and disclosure may not reach private sector standards
but rather be oriented towards public expenditure control, which may at the
same time more burdensome and not fulfil the requirements of timeliness and
materiality central to private sector disclosures practices.
There are some non-financial public enterprises in Bangladesh of which
• Six belong to industrial sector, under these six sector corporations there are a number of
factories and industries.
• In Power, gas and water there are five
• Transportation and communication have eleven, and
• Trade three, Agriculture two, Construction four, and Service thirteen.
State Owned Enterprises in Bangladesh are besieged with same problems common to State
Owned Enterprises throughout the world. Matter is more compounded by the vagueness in
statutory reporting, non-existence of stakeholder pressure, nonexistence of peer pressure,
political patronage.
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6.0 Corporate Governance of Agrani Bank

Corporate governance (CG) is a set of principles, which should be incorporated in every part
of the organization to ensure accountability. It encompasses policies, processes and people
which serve the needs of the shareholders and other stakeholders. Agrani Bank Limited is
always committed to adopt highest governance standards for attaining better operational
goals. Corporate Governance at the bank is defined as the framework under which the bank is
directed to facilitate and control the mutual relationship among the management, the Board of
Directors, Government and other stakeholders, such as employees, clients and lenders. The
collective role of the Board of Directors, Managing Director & CEO and the Audit
Committee of the Bank ensure excellence in corporate governance practices.
6.1 A Brief Overview of Agrani Bank

Agrani Bank Limited, a leading commercial bank with 922 outlets strategically located in
almost all the commercial areas throughout Bangladesh, overseas Exchange Houses and
hundreds of overseas Correspondents, came into being as a Public Limited Company on May
17, 2007 with a view to take over the business, assets, liabilities, rights and obligations of the
Agrani Bank which emerged as a nationalized commercial bank in 1972 immediately after
the emergence of Bangladesh as an independent state. Agrani Bank Limited started
functioning as a going concern basis through a Vendors Agreement signed between the
ministry of finance, Government of the People's Republic of Bangladesh on behalf of the
former Agrani Bank and the Board of Directors of Agrani Bank Limited on November 15,
2007 with retrospective effect from 01 July, 2007
The bank has 11 Circle offices, 34 Divisions in head office, 62 zonal offices and 922
branches including 27 corporate and 40 AD (authorized dealer) branches.
6.2 Status of Compliance Requirement of Bangladesh Bank’s guideline for Corporate

Governance BRPD circular no 16 dated 24.07. 2013
Sl. Particulars Compliance Status Explanation
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No. Complied Non for non

Complied compliance
1. Responsibilities and authorities of the
Board of Directors
(a) Work-planning and strategic
management
(i) The Board shall determine the objectives
and goals and to this end shall chalk out
strategies and work-plans on annual basis. √
It shall specially engage itself in the affairs
of making strategies consistent with the
determined objectives and goals and in the
issues relating to structural change and
reorganization for enhancement of
institutional efficiency and other relevant
policy matters. It shall analyze/monitor at
quarterly basis the development of
implementation of the work plans.
(ii) The Board shall have its analytical

review incorporated in the Annual Report as
regard the success/failure in achieving the
business and other targets as set out in its
annual work-plan and shall apprise the √
shareholders of its opinions/
recommendations on future plans and
strategies. It shall set the Key Performance
Indicators (KPIs) for the CEO and other
senior executives and have it evaluated at
times.
(b) Lending and risk management
(i) The policies, strategies, procedures etc. in
respect of appraisal of loan/investment
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proposal, sanction, disbursement, recovery, √

reschedulement and write -off thereof shall
be made with the Board's approval under the
purview of the existing laws, rules and
regulations. The Board shall specially
distribute the power of sanction of
loan/investment and such distribution should
desirably be made among the CEO and his
subordinate executives as much as possible.
No director, however, shall interfere, directly
or indirectly, in the process of loan approval.
(ii) The Board shall frame policies for risk

management and get them complied with √
and shall monitor at quarterly basis the
compliance thereof.
(c) Internal control management
The Board shall be vigilant on the internal
control system of the Bank in order to attain √
and maintain satisfactory qualitative standard
of its loan/investment portfolio. It shall
review at quarterly basis the reports
submitted by its Audit Committee regarding
compliance of recommendations made in
internal and external audit reports and the
Bangladesh Bank inspection reports.
(d) Human resources management and
development
i) Policies relating to recruitment, promotion,
transfer; disciplinary action and punitive
measures, human resources development etc. √
and Service Rules shall be framed and
approved by the Board. The Chairman or the
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Directors shall in no way involve themselves

or interfere into or influence over any
administrative affairs including recruitment,
promotion, transfer and disciplinary
measures as executed under the set Service
Rules. No member of the Board of Directors
shall be included in the selection committees
for recruitment and promotion to different
levels. Recruitment and promotion to the
immediate two tiers below the CEO shall,
however, rest upon the Board. Such
recruitment and promotion shall have to be
carried out complying with the Service
Rules.
(ii) The Board shall frame the policies and

procedures for Bank’s purchase and
procurement activities and shall accordingly √
approve the distribution of power for making
such expenditures. The maximum possible
delegation of such power shall rest on the
CEO and his subordinates. The decision on
matters relating to infrastructure
development and purchase of land, building,
vehicles etc. for the purpose of Bank’s
business shall, however, be adopted with the
approval of the Board.
(e) Financial management
(i) The annual budget and statutory financial
statements shall finally be prepared with the
approval of the Board. It shall at quarterly
basis review/ monitor the positions in respect √
of Bank’s income, expenditure, liquidity,
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non-performing asset, capital base and

adequacy, maintenance of loan loss
provision and steps taken for recovery of
defaulted loans including legal measures.
(ii) The Board shall frame the policies and

procedures for Bank’s purchase and
procurement activities and shall accordingly
approve the distribution of power for making √
such expenditures. The maximum possible
delegation of such power shall rest on the
CEO and his subordinates. The decision on
matters relating to infrastructure
development and purchase of land, building,
vehicles etc. for the purpose of Bank’s
business shall, however, be adopted with the
(f) Formation of supporting committees Audit √ Board found
For decision on urgent matters an Executive Committee Executive it prudent
Committee, whatever name called, may be Committee to transact
formed with the Directors. There shall be no all relevant
committee or sub-committee of the Board issues in the
other than the Executive Committee and the full Board
Audit committee. No alternate director shall instead of
be included in these committees. Executive
Committee
(g) Appointment of CEO
The Board shall appoint a competent CEO
for the Bank with the approval of the √
Bangladesh Bank
2. Responsibilities of the Chairman and
Board of Directors
(a) As the Chairman of the Board of
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Directors (or Chairman of any Committee

formed by the Board or any Director) does √
not personally possess the jurisdiction to
apply policy making or executive or
authority, he shall not participate in or
interfere into the administrative or
operational and routine affairs of the Bank.
(b) The Chairman may conduct on-site

inspection of any Bank branch or financing
activities under the purview of the oversight √
responsibilities of the Board. He may call for
any information relating to Bank’s operation
or ask for investigation into any such affairs;
he may submit such information or
investigation report to the meeting of the
Board or the Executive Committee and if
deemed necessary, with the approval of the
Board, he shall effect necessary action
thereon in accordance with the set rules
through the CEO. However, any complaint
against the CEO shall have to be apprised to
Bangladesh Bank through the Board along
with the statement of the CEO.
(c) The Chairman may be offered an office-

room, a personal secretary/assistant, a √
telephone at the office and a vehicle in the
business-interest of the Bank subject to the
3. Responsibilities of Adviser Not
The adviser, whatever name called, shall Applicable
advise the Board of Directors or the CEO on (No such
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such issues only for which he is engaged in √ Adviser)

terms of the conditions of his appointment.
He shall neither have access to the process of
decision-making nor shall have the scope of
effecting executive authority in any matters
of the Bank including financial,
administrative or operational affairs.
4. Responsibilities and Authorities of CEO
The CEO of the Bank, whatever name
called, shall discharge the responsibilities √
and effect the authorities as follows:
(a) In terms of the financial, business and
administrative authorities vested upon him
by the Board, the CEO shall discharge his
own responsibilities. He shall remain
accountable for achievement of financial and
other business targets by means of business
plan, efficient implementation thereof and
prudent administrative and financial
management.
(b) The CEO shall ensure compliance of the

Bank Companies Act, 1991 and/or other √
relevant laws and regulations in discharge of
routine functions of the Bank.
(c) The CEO shall report to Bangladesh

Bank of issues for violation of the Bank √
Companies Act 1991 or of other
laws/regulations and, if required, may
apprise the Board post facto.
(d) The recruitment and promotion of all
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staff of the Bank except those in the two tiers

below him shall rest on the CEO. He shall
act in such cases in accordance with the
approved Service Rules on the basis of the
human resources policy and sanctioned
strength of employees as approved by the √
Board. The Board or the chairman of any
committee of the Board or any Director shall
not get involved or interfere into such affairs.
The authority relating to transfer of and
disciplinary measures against the staff,
except those at one tier below the CEO, shall
rest on him, which he shall apply in
accordance with the approved Service Rules.
Besides, under the purview of the human
resources policy as approved by the Board,
he shall nominate officers for training etc.
6.3 Shareholders’ Right, Ownership, Roles and Structure

The Bank is always committed to adopting highest corporate governance standards for
attaining its operational goals and to protect the right of the shareholders.
Shareholders’ Ownership
The ownership of the Agrani Bank Ltd. is fully owned by the Government of Bangladesh.
Shareholders’ Right
As the share is fully owned by the government of Bangladesh, the rights of the shareholder’s
are limited. The government can further issue share to public and the government also can
buy back the shares from the board of directors. The shareholders have right to receive
information and reports of the bank.
Share’s Structure:
The share’s structure of Agrani Bank is as follows:
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Particulars Distribution of Shares

31 December 2013 31 December 2012
Government of Bangladesh 20,72,29,392 9,91,29,392
Directors 12 12
General Public - -
Total 20,72,29,404 9,91,29,404
Shareholder’s Roles:
As early mentioned, the company fully owned by the government except only 12 shares that
hold by the board of directors which is below 0.1 percent of total share, the shareholder (the
government) can remove the directors, change the name of the bank etc.
6.4 Board of Directors of Agrani Bank

The Board of Directors consists of 13 members, including Managing Director & CEO. It has
a committee named Board Audit Committee. Consequent upon the corporatization, the Board
now exercises greater autonomy in running the organization more effectively than before.
Meetings of the Board during 2014

During 2014, 48 Board meetings were held. Since the Board was dissolved and new board
was formed in the month of December 2012, the number of Board meetings held in the year
2013 by previous Board of directors (46 meetings) shown in the table:
Table-1: meetings attended by the Board of Directors
Sl Name of Directors Position Date of Number of
no appointment meetings attended
1. Dr. Zaid Bakht Chairman 48
2. Mr. Arastoo Khan Director 24-12-2012 40
3. Engr. Md. Abdus Sabur Director 20-12-2012 41
4. Mr. K.M.N. Manjurul Hoque Director 11-03-2013 46
Lablu
5. Mr. Niaz Rahim Director 20-12-2012 02
6. Advocate Balaram Podder Director 20-12-2012 34
7. Prof. Dr. Md. Abdur Rouf Director 20-12-2012 44
Sardar
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8. Abduz Jahir Chowdhury Director 20-12-2012 47

(Sufian)
9. Mr. Shameem Ahsan Director 20-12-2012 42
10. Mr. Md. Altaf Hossain Molla Director 20-12-2012 48
11. Mr. A B M Kamarul Islam Director 20-12-2012 45
12. Mrs. Hasina Newaaz Director 20-12-2012 33
13. Mr. Syed Abdul Hamid Managing 11-07-2012 48
Director & CEO
6.4.1 Director Selection policy and Independent Directors

All members of the Board were nominated by the Government and each of them holds one
share which is less than 1 percent of paid-up shares of the Bank. Mr. Arastoo Khan is an
Additional Secretary of Planning Commission, Government of the People’s Republic of
Bangladesh and all other directors are from different professions and private sectors. As per
notification of Securities and Exchange Commission (Ref # SEC/CMRRCD/2006-158/
Admin/02-08, dated 20 February 2006, all of them can be justifiably considered as
independent directors.
Chairman of the Board and Managing Director and CEO

The Chairman of the Board and Managing Director and CEO of the Bank are two separate
individuals. The Chairman is Dr. Zaid Bakht and Managing Director and CEO is Dr. Syed
Abdul Hamid.
6.5 Role of the Board of Directors

The Board plays a significant role in the total affairs of the bank. For the overall growth of
the bank, the Board delivered important directives and guidelines in all major areas to
achieve its objectives. The Board of Directors mainly deals with formulation of business
policies, administrative policies, approval of large credit proposals, rescheduling of loans,
remission of interest, annual budget and audited accounts of the bank. During the period
under review, the Board of Directors took important decisions on different administrative and
policy matters that helped the bank to achieve its desired goal.
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Internal Control and Compliance

The Board is responsible for ensuring an efficient internal control system and for taking
appropriate steps to safeguard the assets of the bank and for preventing and detecting fraud
and other irregularities. Audit Manual and Audit Implementation Manual introduced by the
Bank are being followed to ensure proper internal control. Through the Audit Committee, the
Board reviews the assessed risks and the internal control for the period under review.
Business Risk Management

It is important for the Bank to evolve its risk management strategy in a way that our interests
against any insidious transactions are best protected. According to the instruction of Central
Bank, the bank has introduced Risk Management Manuals approved by the board. The bank
has established a structured framework for risk management. A separate division of the bank
named Core Risk Management & Basel-II Implementation Division established on
19.05.2011 as per instruction of Bangladesh Bank has been working rigorously to overcome
the challenges of core risk.
Credit Rating
In 2011, the bank appointed Credit Rating Information and Services Limited (CRISL) for
credit rating of the bank as per directives of Bangladesh Bank. The rating company assigned
AAA to the bank in the long term and ST-1 in the short term. This rating has been done in
consideration of the guarantee of the Government of the People’s Republic of Bangladesh
being the highest risk free entity. Financial institutions rated in this category have the best
quality, offer the highest safety and have the highest credit quality.
6.6 Directors’ Statement of Responsibilities

Bangladesh Bank sets out the responsibilities of the Directors of a bank. In accordance with
their guidelines, the responsibilities of the Directors of Agrani Bank Limited encompass the
following:
a) Work plan and strategic management

i) Responsible for determining the long term objectives and goals of the Bank and
formulating yearly strategies and action plan for it.
29 | P a g e
ii) They are to drive organizational change to improve the quality of the services rendered by
the Bank in order to achieve the objectives and targets and to analyze the progress of
implementation of work plan.
b) Risk management
i) Responsible for making risk management policies and monitor its institutionalization.
c) Credit management
i) Responsible for making policies and procedures to evaluate, disbursement, recover,
reschedule and write-off loans and advances as per applicable rules and regulations.
ii) They may delegate power to the CEO and other senior executives for approval of loans
and advances as deemed necessary.
d) Internal control management

They approve annual audit plan and evaluate the report of Audit Committee regarding the
implementation of suggestions from internal audit, external, and Bangladesh Bank audit.
e) Committee formation
i) Responsible for constituting the Audit Committee from members of the Board of Directors.
ii)Responsible for forming executive/other committees as per guideline of the BB.
iii) Responsible for forming Risk Management committees as per guideline of BB.
f) Human resources management and development

i) Responsible for framing the service rules and policies for appointment, promotion,
retirement, transfer, punishment, training and development of human resources.
ii) Responsible for approving ICT policies, introducing and developing Management
Information system (MIS).
g) Financial management
i) Responsible for approval of the annual budget and statutory financial statements.
ii) Responsible for evaluating the income, expenses, liquidity, capital adequacy, recovery of
expired/ uncollected loans and advances, maintenance of provisions and legal actions to
recover the loans and advances.
iii) Responsible for framing purchase and procurement policies and procedures.
30 | P a g e
iv) They would not interfere directly or indirectly with the approval of any loan proposals.
h) Appointment of CEO
i) Responsible for appointing a competent Chief Executive Officer (CEO) with the approval
from Bangladesh Bank.
ii) Responsible for determining the key performance indicators (KPI) of CEO and other
senior executives and evaluate the same from time to time.
i) Other responsibilities
They also perform other responsibilities as may be determined by Bangladesh Bank from
time to time.
6.7 Management Rights, Roles and Authorities

The management of each Bank shall be vested in its board of directors. While Bank boards of
directors may delegate the execution of operational functions to Bank personnel, the ultimate
responsibility of each Bank's board of directors for that Bank's management is non-delegable.
Management Structure:
Board of directors is in the highest level of the bank’s structure. But their responsibility is not
to operate day to day activities. The duty is given to the management committee. The Bank is
headed by the Managing Director & Chief Executive Officer; Managing Director is assisted
by Deputy Managing Directors and General Managers.
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6.8 Roles and Responsibilities of Management

Processes and Strategy:
The Management of each bank is responsible to operate and handle the business. The
management is responsible to set strategy and processes for the company. But it is not
necessary for the management to micromanage the bank operation. The management has
several additional levels of management.
Preparation of Financial Statement:

Management is responsible for the preparation and fair presentation of the consolidated
financial statements of the company and also separate financial statements of the Bank that
give a true and fair view in accordance with Bangladesh Financial Reporting Standards
(BFRSs) as explained in Note 2 and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements of the Group and also
32 | P a g e
separate financial statements of the Bank that are free from material misstatement, whether
due to fraud or error.
Ensuring Corporate Governance:

The management plays an important role to ensure the corporate governance throughout the
bank that ensures and helps to achieve maximum wealth of the bank.
Others Roles:
Besides these, the bank management plays important roles for the following matters:
 Ensuring the implementation of Bangladesh Bank’s policies
 Maintaining capital adequacy
 Ensuring Proper loan classification, provisioning and loan rescheduling
 Monitoring performance
7. Corporate Governance of Dutch Bangla Bank Limited

Dutch Bangla Bank is one of the important financial institutions in the Bangladeshi economy.
The economic development of a country depends on the development of banking sector.
Today this bank is not only providing traditional banking services but also expanding many
financial services. The demands of corporate governance require professionals to raise their
competency and capability levels to meet the expectations in managing the enterprise and its
resources effectively with the highest standards of ethics which is being practiced by the
DBBL. The Bank has adequately complied with all the Corporate Governance Guidelines of
Bangladesh Bank and Securities and Exchange Commission (SEC). It is ensured by the
Board that all activities and transactions of the Bank are conducted in compliance with the
best international practices to protect the highest interest of all the stakeholders. Maximizing
value for shareholders through performance with good governance is the responsibility of
corporate management. In line with the best practice, the corporate governance systems and
practices in DBBL are designed to ensure adequate internal control in operational process,
transparency and accountability in doing business; and proper and timely disclosures in
financial reporting so that value is maximized for all the stakeholders.
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Corporate Governance in DBBL

Corporate Governance has become an important issue in this region that provides a
framework for internal control, thereby reducing agency problem. It is the system of internal
controls and procedures used to define and protect the rights and responsibilities of various
stakeholders. The Bank has adequately complied with all the Corporate Governance
Guidelines of Bangladesh Bank and Bangladesh Securities and Exchange Commission
(BSEC). It is ensured by the Board that all activities and transactions of the Bank are
conducted in compliance with international best practices to protect the highest interest of all
the stakeholders.
7.1 Shareholders
7.1.1 Shareholders Rights and Obligations
The Corporate Governance framework of Dutch Bangla Bank Limited (DBBL) protects and
facilitates the shareholders rights and obligations, as set by the bank’s Memorandum of
Association and the Central Bank of Bangladesh.
Ownership Structure
Ownership (%)
Institutions
0%
Foreign
26%
Govt.
0%
Public Sponsor/ director
13% 61%
Controllers and Minority Shareholders

All DBBL’s shareholders are treated equally. All shares carry the same rights and all
shareholders should are to be able to obtain information about the rights and obligation.
34 | P a g e
Minority shareholders must be protected from abusive actions by, or in the interest of,
controlling shareholders acting either directly or indirectly, and must have effective means of
redress.
The Controlling Shareholder as a legal or natural entity who holds 10% or more of the shares
in a company or is able to exercise (or control the exercise) more than 10% of the voting
power in the company. Whereas a Minor Shareholder is defined as a legal or natural entity
who doesn’t control the management of the company or select its directors.
7.1.2 Shareholders Rights

Each share confers upon its holder equal rights and obligations. A shareholder shall have the
following rights in particular:
 Receiving dividends approved for distribution to the shareholders.
 The right to division of its assets upon dissolution and liquidation. Upon distributing
any profit, DBBL shall pay profit to the shareholder who is registered in the Bank’s
records as the final shareholder, upon approval of the financial statements and
dividends by the General Meeting as far as the Bank’s assets are concerned the latest
shareholders registered in the
 Bank’s records will be the sole person who is entitled to receive the share value such
in assets.
 Participating in the management of the Bank’s business, whether at the General
Meetings or the Board of Directors in accordance with the Bank’s Articles of
Association.
 Receiving a printed brochure including previous year’s balance sheet, profit and loss
account, the report of the Board of Directors and the report of the auditors.
 Filing actions do mining for revoking any resolution adopted by the General
Assembly and the Board of Directors that is not in compliance with the applicable
laws, Memorandum or Articles of Association.
 Disposing of the shares owned by him and enjoying a priority to subscribe for the new
shares in accordance with provisions of the law.
 Having access to the Bank’s records, obtaining photocopies or extracts thereof subject
to the terms and conditions set out by these Articles, provided that the use of such
documents shall not adversely affect the Bank’s interest, its financial position or third
parties.
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7.1.3 Shareholders Obligations

Each share confers upon its holder equal obligations. A Board Member shall have the
following obligation in particular:
 Payment of the outstanding installments.
 Payment of the expenses incurred by the Bank towards the unpaid installments and
selling of shares.
 Refraining from any act that may deliberately be detrimental to the Bank.
7.2 Board of Directors

In line with best practice, the corporate governance systems and practices in DBBL are
designed to ensure adequate internal control in operational process, transparency and
accountability in doing business, proper and timely disclosures in financial reporting so that
value is maximized for all the stakeholders.
Responsibilities and functions are segregated in a way to strike the right balance between the
Board and the management. The Board provides leadership and direction of the Bank,
approves strategic plans and major policy decisions and supervises performance of the
management. The Board is responsible for ensuring and encouraging compliance, ethical
standard and integrity throughout DBBL.
7.2.1 The Board and their responsibilities

 The Board is comprised of directors having diverse skills, experience and expertise to
add value towards better corporate governance of the Bank and maximizing value for
all stakeholders.
 The Board discharges its responsibilities itself or through various committees.
The Board and its committees are responsible for ensuring the following
 Disclosure of accurate, timely and reliable information to shareholders.
 Setting key targets of the Bank and monitoring progress towards achievement of such
targets.
 Approval of major policy decisions and long term strategic plans to achieve key
objectives in an efficient and effective way.
 Ensuring appointments of right people in key management positions with appropriate
compensation package and to evaluate their performance to encourage long term
success of the Bank.
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 The Board must be satisfied that sufficient risk management systems are in place to
mitigate core risks of the Bank and that there are adequate checks and balances in the
internal control system to protect the value and quality of assets of the Bank.
7.2.2 Key objectives of the Directors

The directors are expected to protect the long term interest of the shareholders and all
stakeholders by setting key objectives for the management and by monitoring and ensuring
that those objectives are achieved by the management in a sustainable way while maintaining
transparency and accountability at every stage of operations.
They are expected to
 Demonstrate the highest professional and ethical standard.
 Be fully independent from management.
 Be knowledgeable about the business and challenges facing the DBBL.
 Apply prudence and judgment in decision making.
 Display commitments to the Bank and its all stakeholders through participation in the
affairs of the Bank.
7.2.3 The Committees of the Board of Directors

The Board has two committees namely the Executive Committee and the Audit Committee.
Each
Committee operates under specific Terms of Reference (TOR) that sets out its responsibilities
and composition. Audit Committee of the Board is fully comprised of non-executive
directors. The TORs are designed and reviewed to ensure that the objectives of each
committee are achieved in an effective way and that regulatory obligations and obligation to
shareholders are fulfilled. The Committee regularly evaluates progress towards key
objectives. Accordingly, time and efforts are dedicated to focus on responsibilities those are
central to achieve the core objectives of respective committees.
7.3 Management
7.3.1 Duties & Responsibilities of a management at DBBL

Operations and Policy
The management of DBBL is responsible for operations and policy. These operations include
how the bank handles business. These functions are defined and regulated by the Federal
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Reserve, but things not regulated are determined by bank policy written by the decision
makers in the bank management team, which is supervised and directed by the management.
These policies and procedures govern operations such as lending requirements, mortgage
requirements, opening an account, savings account rules, checking account rules, interest
paid to customers and profit margins on money under the bank's control. The management is
answerable to the customers, shareholder and the Federal Reserve Bank for violations of
these policies. It is not necessary for the management to micromanage the bank operation.
The management has several additional levels of management. While the management is
ultimately responsible for the overall success of the operations and policy of the bank, these
additional managers will handle a specific aspect of the operations and report directly to the
management.
Accurate Reporting of Finances and Data
Financial regulations have placed greater emphasis on the accuracy of data and finances
reported to the public as part of the bank's financial statements. From 2005 to present there
have been several high profile fraud cases surrounding financial statements. To combat this
type of fraud, members of the board of directors, the management, CFO and managers are
now personally liable for inaccuracies in financial statements. The management of a bank is
responsible for making sure the data that is reported to the shareholders, board of directors
and customers is accurate and compliant with Federal Reserve requirements. A CFO who is
open and transparent with the financial data of his company will boost confidence in all
parties who have an interest in the bank's success.
Plan and Coordinate Day to Day Operations
The management of DBBL delegates responsibilities and follow up in a timely manner to

ensure that the core functions of the bank and business are being conducted to meet the needs
of the customers. Many banks have several organizations that conduct specific functions of
the banking operation. The management must monitor all his subordinates to make sure the
bank is performing well and all returns on investments are being maximized. The
management often has additional roles he must fulfill. The management might be a member
of the board of directors for the bank. She may also be part of audit committees or bank
governance committees charged with making sure the bank remains transparent and
accountable to the investors. Management must also make changes based on economic
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conditions. Bank managements network with colleagues from other banks to share ideas for
navigating the changes in regulations or economic conditions.
7.3.1 Management benefits and compensation
An employee (Senior or Principal officer) of a Dutch Bangla Bank Limited enjoys the
following benefits with basic salary given by the bank authority, those are discussed
as follows.
 Accommodation allowance
A senior principal officer of DBBL enjoys 60% accommodation allowance of his or her basic
salary.
 Conveyance allowance
Conveyance allowance also is provided to the senior officer of this bank, the employees get
3.75% of basic salary as the conveyance allowance.
 Medical facility
About 10% of one’s basic remuneration is given to a senior principal officer as the medical
facilities.
 Provident fund
An employee enjoys the provident fund facilities. For this an employee has to pay 10% of his
or her basic salary to the provident fund and the employer also has to pay 10% to the
provident fund.
 Insurance benefit
Insurance benefit is given to each employee by the authority of the

bank.Insurance facility is totally offered by the bank authority when anemployee dies during
his or her job period.
 Promotion facility
Every employee enjoys the promotion facility in the DBBL. Promotion facility is provided on
the basis of the employee’s job performance. If an employee can perform his job properly he
can get or enjoy such facility form the bank.
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 Loan facility
The employees of DBBL also enjoy the loan facility from

thebank. Generally the employee has the opportunity to get 75% loanfacility against his or
her deposited money to the provident fund.
 Festival bonus
Every employee gets two bonuses facilities in every year for tworeligious program. These
bonuses are equal to one month’s gross salary.
 Leave with payment
A senior principal officer gets the two types of leave with payment. He enjoys the 20 days of
a year as casual leave and 33 days of a year as privilege leave.
 Bonus facility
Employee also gets two types of bonus facility from authority. One is
festival bonus that has been discussed previously and another is incentive bonus. Incentive
bonus is given to every employee when bank earns huge amount of profit. The main purpose
of this bonus encourages and motivates the employee so that every employee performs their
perspective job with interest.
 Subsistence allowance
An employee gets the subsistence allowance for the time being, it is also paid to the
employee when the price of daily necessary things increases.
 Reward
When an employee is able to achieve the of the bank and can take vital rule by his job
performance in his working time,. The bank authority gives his or her some money or
maintenance promotion as the reward of his or her extra performance.
 Scholarship benefit for the children by the welfare fund
If any boy or girl of an employee makes good result in the publicexamination, an employee
gets tk. 20,000 for his or her children for better education. But for this facility an employee
has to become a member to the welfare society and he has to pay the fixed monthly payment.
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 Sick leave
Sick leave is provided to the employee until he or she comes round. There is no specific time
for sick leave.
 Pension
Every employee gets the pension facility when an employee goes to retirement he or she gets
a large amount of money at a time. That
money is deposited by the bank authority at 10% rate of basic remuneration in the provident
fund.
8.0 Corporate Social Responsibility
8.1 Corporate Social Responsibilities of Agrani Bank Limited

The role of business, in worldwide and especially in the developing countries, has evolved
over the last few decades from classical ‘profit maximizing’ approach to a ‘social
responsible’ approach. There are many reasons for shifting the role of business from classical
concept to a social responsible approach. Enterprises create wealth and job opportunities for
the society and on the other hand, they pollute and destroy environment and ecology with the
devastating impact on human health and bio-diversity worldwide. The concept of social
responsibility of a company is recent phenomenon but many observers agree that the
globalization has spurred its growth and prominence.
Primarily Corporate Social Responsibility (CSR) starts with the consideration of social
implications by any corporate body which is ultimately reflected through its initiatives
towards betterment of the disadvantaged peoples of a society. As such in broadly defining,
CSR refers to the voluntary role of business towards building a better society and cleaner
environment beyond its financial commitments and regulatory obligations. Considering
importance of CSR, Bangladesh Bank since June 2008 has officially started encouraging
towards mainstreaming CSR in banks and financial institutions of Bangladesh. As a
stakeholder of the society, Agrani Bank Limited is keen to augment CSR activities gradually
in the days to come.
Agrani Bank Limited passionately believes that a better society is fundamental precondition
for a better business environment. Nevertheless, CSR is viewed as one of the core corporate
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values of the Bank. In its millennium summit held at the UN Head Quarters, New York, USA
in 2000; the United Nations set eight goals popularly known as Millennium Development
Goals (MDGs), such as: i) eradicate extreme poverty and hunger, ii) achieve universal
primary education, iii) promote gender equality & empower women, iv) reduce child
mortality, v) improve maternal health, vi) combat HIV/ AIDS, Malaria and other diseases,
vii) ensure environmental sustainability and viii) develop a global partnership for
development. Bangladesh is one of the signatories to achieve those goals by 2015. As such,
ABL has aligned her CSR activities partially with those goals.
Agrani Bank Limited is committed to contribute towards social development through its CSR
program. ABL’s ethical standard is not only meant for maximising profit, rather it’s vision is
to build up a society where human dignity and rights receive the highest consideration and
evaluation. Bank’s motto is also to improve the society and its culture by means of CSR.
Education
Like the previous years, ABL has donated a good amount to various educational institutions.
In the year, the Bank donated Tk. 143.31 lac to 66 beneficiaries. These helps were extended
for renovation or construction of building/ class rooms of different schools, colleges,
universities, libraries etc.; giving stipend to the poor meritorious students; sponsoring various
seminars, conferences, convocations, alumni, anniversaries, drama festivals, competitions,
training programs; observing important national days etc. With a view to providing a smooth
interface between student life and professional life, ABL offers internship facility to the BBA
and MBA passed students of different universities. The interns were granted the opportunities
to groom with us in a truly professional, dynamic and challenging corporate environment.
Health Care
Access to healthcare facilities is one of the fundamental rights of every human being.
However, most of our people, especially the underprivileged group has little or no access to
health care facilities. However, ABL is committed to assist those poor people, who have no
way to secure basic treatment. During the year 2013, the Bank has givenfinancial assistance
from its CSR fund a sum of Tk. 154.04 lac to 139 beneficiaries to ease their miseries.
Disaster Relief
ABL’s lending policies with regard to environmental management are responsive to

emergency support needs of population groups affected by natural and manmade disasters.
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During the year 2013, the Bank has spent Tk. 262.15 lac for the donation of 25,364 blankets
to the cold stricken poor people of the country in the districts of Rangpur, Dinajpur,
Thakurgaon, Gaibandha, Kurrigram, Panchagarh, Mymenshingh, Pabna, Sylhet and in the
Dhaka city as well.
Concern for the Environment
In the year 2013, the Bank contributed 3.00 lac to –‘Make Rajshahi Green Project’; 10.00 lac
to Hatirjheel Project, 60.00 lac for distribution of seedlings and 5.50 lac for tree plantation &
exhibition.Total value was 80.50 lac against 5 beneficiaries. Today our planet is exposed to a
severe environmental catastrophe than ever before. ABL’s corporate social responsibility
contributes generously to the development of Green Banking. Protection and thus nourishing
the environment is part of ABL’s investment principle. Environmental issues are taken into
account while the Bank is assessing credit proposal for the industrial projects. As a humble
effort to reduce environmental pollution, the Bank is financing CNG refueling stations.
Besides, most of office vehicles of the Bank have already been converted to CNG fueling
system.
Sports
In the year 2013, the Bank has donated TK. 76.90 lac to 6 beneficiaries of different football
and hockey clubs and tournaments for the promotion of games and sports. ABL has its own
football team that has been participating in the national football league relentlessly since
independence. In several times the team defeated renowned clubs of the country like
Mohammedan, Abahone, Brothers Union etc. The Bank has also a cricket team of its own
that has been participating in the First Division Cricket League since independence. The team
frequently succeeds to keep its ranking position from three to five in the league. A good
number of cricketers and footballers are playing in the national and international levels who
were once member of ABL sports team.
Arts and Culture
Again Bank Limited is always committed to enriching Bengali heritage, art, culture and
literature. During the year 2013, the Bank contributed Tk.39.06 lac to 15 programs and
purposes relating to different cultural affairs. From 2011 onward, ABL is sponsoring children
book fair at the Bangladesh Shishu Academy premises. In the year 2013, seven eminent
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writers were awarded Agrani Bank Children Literary Award; a prestigious literary award of
the country introduced by ABL since 1981 and is being offering every year.
Customers and Wellwishers
ABL feels proud to provide services to the valued costomers without any hidden cost. The
Bank serves to customers as a business partner. The Bank sincerely strives to improve
business relationship with the customers for common benefit. By optimising financial
performance at the least cost the Bank protects the interest of customers. The Bank is
maintaining a good relationship with the peer business friends for mutual growth and
development. The relationship with our business partners is based on reciprocal trust and
respect. We transact with them in a fair and transparent way.
Poverty Alleviation
It is globally accepted that the Non-Government Organizations (NGOs) have been

performing a laudable role in poverty alleviation across the world, especially in Bangladesh.
With a view to widening the access to finance to the poor and ultra poor community, ABL
has been financing NGOs since 1997 at privileged rates of interest. ABL financed NGOs are
of various categories and capacities. Such activities also contributed to generation of income
and employment as well.
Promotion of Crop Production
To attain food security of the country, ABL has been in a unique position to providing credit
facilities to the farmers at a lower rate of interest (currently at 8 percent) since 1977. A huge
amount of foreign currency is spent in every year to import pulse, oil-seeds, ginger, spices,
maize etc. In order to save foreign currency, the Government of Bangladesh encourages our
farmers to boost up the production of above crops by introducing rebate rate of interest at 4
percent which is considered as the lowest rate of interest among any credit facilities.
Promotion of Entrepreneurship
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The Bank envisaged fostering entrepreneurship amongst the potential, new and small
entrepreneurs and generating employment through financing Small and Medium Enterprises.
Keeping the aim in mind, ABL does not only run after the so called blue chips towards profit
maximize of the Bank. Rather, it always remains stick to the triple bottom line: People, Planet
& Profit and focused to the promotion of SMEs. In this way, a lot of entrepreneurs have
grown with us through which employment opportunities are created for a huge number of
people.
Women Empowerment
As half of our population is woman, a sustainable national progress can’t be attained if

women are left aside. Therefore, they should progressively be brought to the mainstream of
our development activities. Considering this reality the bank through its ‘Nari Agrani’
program has been mobilizing credit facilities in industry, service and business sector to the
potential women entrepreneurs at a reduced rate of 10 percent interest. ABL’s program for
the woman entrepreneurs will gain due momentum in the days to come.
Awareness Building
Generation of awareness is a very useful tool to combat social evils, like drug addiction,
smoking, pollution, terrorism, population etc. For this purpose, the Bank has continued
support to different social organizations who displayed banner, festoon, sticker, display board
and use such other communication channels for discouraging drug, smoking, pollution,
population growth etc. The Bank continued such awareness building activities in the year
2013.
Category-wise CSR activities of the Bank in 2013 are as follows: Taka in Lac
Sl. No Nature of Work Beneficiaries Amount

01 Education 66 143.31
02 Health care 139 154.04
03 Disaster relief 25364 262.15
04 Environment 05 80.50
05 Sports 06 76.90
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06 Arts & culture 15 39.06

07 Others 55 81.19
Total 25650 837.15
Other CSR Activities
Agrani Bank Limited is always attentive to attain more and more good corporate attributes.
So, apart from the exposures mentioned above, ABL’s CSR disclosure includes multi-faceted
social activities. ABL has also been indirectly contributing to CSR activities. In the year
2013, ABL disbursed Tk. 31.45 crore in spices loans i.e. pulses, oil seed, ginger, maize etc. at
the rate of 4 percent interest and Tk. 788.89 crore in crops loans at the rate of 8 percent
interest. If the two loans were counted at the rate of 10 percent interest, then it is observed
that, the Bank conceded a loss of Tk. 1.89 crore and Tk. 17.67 crore respectively which may
be treated as CSR otherwise.
8.2 Corporate Social Responsibilities of Dutch Bangla Bank Limited

Dutch-Bangla Bank now performs their social responsibility in some selected sector. Its have a
separate foundation called Dutch-Bangla Bank foundation. The bank donates mainly
towards social awareness programs, medical and educational fields. DBBL also
maintains the largest scholarship program in Bangladesh whereby college/university
education tuition and expenses are fully paid for unconditionally by the bank. But they can
expand their business and broaden their sector of social responsibility. The diagram indicates
that DBBL contributes Tk.50.16 million in education sector , Tk.27.75 million in health
sector, Tk.12.5 million in disaster sector, Tk.5 million in culture and sports sector and
Tk.30.75 in miscellaneous sector out of total contribution in 2010.
Education: Education is a pre-requisite for the overall development of the country.

Keeping this view in mind, Dutch-Bangla Bank Limited has been giving priority to the
education sector. Awarding scholarship and fellowship to meritorious students, helping
development of infrastructural facilities, providing essential educational equipment etc. are
some of the aspects included in the program. In 2010 DBBL spends Tk. 50.16 million in
education sector. From the diagram we see that DBBL spends 27% amount for scholarship
program, 64% for educational infrastructural development program, 1% for providing
educational equipment, 7% for Ganit Utsab and 1% in miscellaneous purpose out of total
Tk. 50.16 million in 2010.
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Health: Health is one of the prime parameters to achieve Millennium Development Goal
(MDGH). Health needs are increasing day by day due to rapid growth of population. Dutch
Bangla Bank has identified health care as a priority sector and helps create better health care
facilities at a cheaper cost for disadvantaged population. In this connection Dutch Bangla
Bank extended its support towards the following projects. In 2010 DBBL spent Tk. 27.02
million in health setor out of which 10% spent for cleft lip operation, 7% for cataract
operation, 4% for V.V.F operation, 63% for health infrastructure development and 16% for
donation for medical treatment.
Disaster Support Program to the Victim of Natural Calamities:
Dutch-Bangla Bank Limited stands by the distressed people at the time when natural
calamities like cyclone, flood, tornado, landslide, river erosion, devastating fire etc.
occur . DBBL provides support to the affected people in cash and kind for their
rehabilitation. In 2010 DBBL donate Tk.12.5 million in this sector. The donation in kind
includes food, medicine, water purifying tablets, blankets, GCI sheets etc. contribution of
DBBL in this sector given bellow:
Donation
Donation to Liberation War Museum: Liberation War Museum (Muktijuddha Jadughar) is an

achieve of glorious liberation war. The museum authority has taken a project to
rebuild and modernize it with all latest technological facilities for collecting, preserving and
displaying the historical documents. DBBL appreciates noble initiative and provided
financial assistance Taka 5,000,000 (Taka five million) “Muktijuddha Jadughar Nirman”
project.
Donation to the family person killed by Afgan terrorists: Donation Taka 5,00,000 was made
to the window of Kazi Altaf Hossain, a Bangladesi engineer who went to Afgaisthan for
earning his livelihood. He was abducted and gunned down by Afgan terrorists in December
2010.
Donation to a family of a victim killed for resisting eve teasing: Donation Taka 10,00,000
to the widow of Mizanur Rashid, a college teacher who was killed by stalker for trying to
resist eve teasing at Lokmanpur, Natore.
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Donating pick up van for Police: DBBL donated a double cabin pick up van at cost of
Taka 2,00,000 to Dhaka Metropolitan Police for improving its transport facilities in
performing duties efficiently and serving the people. Dutch-Bangla Bank Limited has
donated a double cabin Pick-up Van to the DMP commissioner to quick mobility in
performing their work.
Dutch-Bangla Bank distributes blanket: Dutch-Bangla Bank Ltd. has taken up a

programme to distribute 20,000 blankets worth Tk. 44 lac among the poor and needy
villagers in Lalmonirhat, Gaibandha, Rangpur, Kurigram, Nilphamari and Pabna districts.
Dutch-Bangla donation for Cancer Hospital: Dutch-Bangla donate for Cancer Hospital Tk. 4
crore. Dutch-Bangla Bank authorities decided to donate Tk. 4 crore for construction of the
first floor of the proposed Ahsania Mission Cancer Hospital (AMCH) to be established by
Dhaka Ahsania Mission at Uttara in the city.
DBBL has donated two modern ambulances to Anjuman Mufidul Islam: Dutch-Bangla Bank
Limited (DBBL) has donated two modern ambulances imported from Japan to Anjuman
Mufidul Islam.
Sports Sector and Other Sectors
Sponsoring 11th South Asian games: DBBL sponsored the prestigious ‘11th south Asian
games Dhaka 2010’ which was held in Dhaka during January 29, 2010 to February 09, 2010.
It was the largest sporting event in South Asia participated. The games were viewed by more
than a billion people worldwide.
DBBL donate Tk. 3 crore to Bangladesh Olympic Association (BOA): DBBL donate Tk. 3
crore to Bangladesh Olympic Association (BOA) for constructing Bangladesh Olympic
Bhaban to encourage development of sports and culture.
Information Technology: Dutch-Bangla Bank Limited (DBBL) undertakes a project with

BASIS (Bangladesh Association of Software and Information Services) to award the best IT
uses by Bangladeshi companies. In this regards, DBBL's contribution in supporting this
event was 50% of the estimated cost with Tk. 6.25 Lac.
Vote for Cox’s Bazar-‘Jago Bangladesh’: A two day Long campaign namely -‘Jago
Bangladesh’ was hold during the 27-28 march, 2009 with a view to mobilizing vote for Cox’s
Bazar sea beach to asertian the position in the seven wonders of the nature.
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9. Analysis and findings

We have analyzed the above elaborated corporate governance of both the public and private
bank and found some prospects:
9.1 Challenges of management of Agrani Bank
Though it is a state owned commercial bank, the management of the bank encounters serious
challenges. Among them, some important challenges are given:
Overcoming Political Influence:

As this bank is fully owned by the government, the management has to fulfill the demand of
the ruling political party. So, management has to handle those political clients effectively and
efficiently.
Non Performing loan:

As this bank is not free from political influence and nepotism, there arises the sever chance of
nonperforming loan. So the management has to justify the background and solvency of the
prospective borrower and to handle the political customer before sanctioning loan.
Technological Backwardness:
As compared to other banks Agrani Bank has lack of advanced technologies. Some of the
employees still have to work manually which costs time and money.
Bribery:
Bribery is one of the major challenges for the management of Agrani Bank. It is initiated by
a person who seeks bribes or by a person who offers and pays bribes. Sometimes to grant
loan the officials take bribe that increase the chance of non performing loan.
No specific corporate governance manual:
Agrani bank is operating based on corporate manual provided by Bangladesh bank. It does not
have any corporate governance manual of its own.
49 | P a g e
9.2 Problems and challenges Faced by a management of DBBL

DBBL are responsible for the overall efficiency and profitability of the bank. Banks are
structured in such a way that there is a head office where the institution’s top management
operate from, and branches that are headed by branch managers. There are also various
aspects of management within a branch, such as relationship, operations and credit
management. All managers must ensure that they fulfil the policies, targets and standards set
by the head office. Bank managers encounter challenges in all the key result areas of their
work.
Staff Engagement
There are a number of challenges in keeping a DBBL management's staff engaged. Bank
work can be routine because of the repetitive tasks involved. Staff may also be demoralized if
they have to regularly deal with difficult customers. Therefore, the bank management needs
to find ways to keep morale and productivity up and to enhance the employees’ job
satisfaction. They must develop a system of job rotation where staff periodically changes
roles to avoid monotony and enhance their skills. They must also develop mechanisms to
identify and reward outstanding performance.
Branch Targets
The head office sets targets for every branch, and the manager faces a challenge in
consistently meeting or surpassing these targets. One of the duties of a bank manager is to
develop, implement and review the strategies of the branch in retaining existing business and
attracting new clientele to meet the identified targets. Then they must determine how they
will deploy the human and capital resources available to her to reach the intended objective.
For example, DBBL management might decide to expand business through a marketing
campaign that they funds from the branch budget. Their goal is to drum up enough business
to meet growth targets established by the corporate or regional headquarters.
Customer Service
Supervising customer service is a very demanding role. Bank management are in charge of
ensuring that when customers visit the bank to open or close accounts, make deposits, apply
for loans or process payments, they receive prompt assistance. If a customer is dissatisfied,
the manager is responsible for sorting out the matter. Often, by the time a customer asks to
50 | P a g e
see the manager she is already frustrated or even hostile because she didn't receive
satisfaction from tellers or other employees. Therefore, the bank management is the final
arbiter. They have to calm the customer down and get her to a point where they are ready to
listen, and then offer a solution that works for the customer while still protecting the interests
of the bank.
Operational Management
The DBBL management is responsible for ensuring that the daily operations of the bank are
smooth and efficient. They oversee the hiring, deployment, training and development of staff
so that they are knowledgeable in the working practices, policies, laws and regulations
relating to their work. However, there are times when the management has to make a difficult
decision in letting staff go either because of non-performance or downsizing. The
management also supervises security at the bank to determine whether employees might be
guilty of fraud or theft. In such an event, the manager faces the problem of containing the
situation and taking appropriate action.
10. 0 Comparison between Corporate Governance and CSR of Agrani bank and DBBL
Agrani bank is operated by government engaged directors and DBBL’s Board of Directors is
appointed by shareholders. There is a little chance of corruption in DBBL’s BOD selection
than Agrani bank’s. Political influence and interruption is a key hindrance in smooth
operation of Agrani bank’s Corporate governance. But DBBL management and Human
Resource Department also has some challenges like right board of directors selection, branch
management etc. but from the financial performance analysis will be better to say which bank
is more effective in terms of corporate governance. But from the analysis of theoretical
perspective, DBBL’s corporate governance faces less threatening challenge than Agrani bank
as its BOD, management and Shareholders are not influenced and biased by political motives.
In terms of CSR, DBBL does a lot of CSR than Agrani bank as it has less non performing
assets and more profits. CSR of DBBL is well organized and performing effectively on
customer retention. But Agrani bank is also performing CSR slowly and promised a lot in this
sector.
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11. Recommendations and Implications:

Some recommendations are:
 Boards of directors need to reconsider their approach to corporate governance

 Downsizing or upsizing Board of Directors
 Management may need to consider their approach of making branch management and
employee satisfaction more easy.
12.0 Conclusion
The system of rules, practices and processes by which a company is directed and controlled.
Corporate governance essentially involves balancing the interests of the many stakeholders in
a company - these include its shareholders, management, customers, suppliers, financiers,
government. These two selected companies is doing quite well in terms of corporate
governance but government intervention is question mark and potentially harmful for the
public bank like Agrani bank. The government and authority need to consider this situation
carefully
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13.0 References
Agranibank.org,. 'Agrani Bank Limited'. N.p., 2015. Web. 4 Apr. 2015.
Bank, Dutch. 'Dutch-Bangla Bank'. Dutchbanglabank.com. N.p., 2015. Web. 3 Apr. 2015.
Bei-bd.org,. '.: BANGLADESH ENTERPRISE INSTITUTE :.'. N.p., 2015. Web. 8 Apr.
2015.
Ecgi.org,. 'European Corporate Governance Institute'. N.p., 2015. Web. 8 Apr. 2015.
Hirschey, Mark, Kose John, and Anil K Makhija. Corporate Governance. Amsterdam:
Elsevier JAI, 2004. Print.
Kaen, Fred R. A Blueprint For Corporate Governance. New York: AMACOM, 2003. Print.
Mallin, Chris A. Corporate Governance. Oxford: Oxford University Press, 2004. Print.
McRitchie, James. 'Corporate Governance - Corpgov.Net: Improving Accountability Through

Democratic Corporate Governance Since 1995'. Corporate Governance. N.p., 2015.
Web. 8 Apr. 2015.
Monks, Robert A. G, and Nell Minow. Corporate Governance. Malden, Mass.: Blackwell
Pub., 2004. Print.
Sheikh, Saleem, and William Rees. Corporate Governance & Corporate Control. London:
Cavendish, 1995. Print.
Solomon, J, and Aris Solomon. Corporate Governance And Accountability. New York: John
Wiley, 2004. Print.
Ssrn.com,. 'Home :: SSRN'. N.p., 2015. Web. 8 Apr. 2015.
Dignam, Alan J, and Michael Galanis. The Globalization Of Corporate Governance.

Farnham, England: Ashgate, 2009. Print.
Investopedia,. 'Investopedia - Educating The World About Finance'. N.p., 2015. Web. 11
Apr. 2015.
Kaen, Fred R. A Blueprint For Corporate Governance. New York: AMACOM, 2003. Print.
53 | P a g e
Solomon, J, and Aris Solomon. Corporate Governance And Accountability. New York: John
Wiley, 2004. Print.
54 | P a g e

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Table of Contents

1.0 Introduction ................................................................................................................................. 3

7.3 Management ................................................................................................................................ 37

1.1 Objectives of the Study

a) To know about Corporate Governance in Bangladesh

1.2 Methodology of the Study

1.2.1 Sources of Data:

 Annual report of Dutch Bangla Bank Limited and Agrani bank.

 Periodicals published by the Bangladesh Bank.

1.3 Data Analysis

1.4 Limitation of the Study

a) Only secondary data collection

2.0 Overview of Corporate Governance

2.1 Definition of corporate governance by authors

3.0 Literature Review

A number of studies on the state of corporate governance in Bangladesh were undertaken

A comprehensive diagnostic study was conducted by Bangladesh Enterprise Institute (2003)

Incompleteness of Board committees hinders good CG in Bangladesh. Board committees

Discrepancy between International Accounting Standards (IAS) and Bangladesh Accounting

4.0 An overview of corporate governance practices of public sector organizations in

Moreover, there is a general lack of research in corporate governance practices in developing

Corporate governance structures in developing countries are weak. Consequently, several

The concept of competitions as a way of encouraging improvements in productivity has been

5. Corporate Governance in Financial Enterprises in Bangladesh

Corporate Governance in State-Owned Enterprises in Bangladesh

In many developing countries, the state remains a significant owner of commercial

an undeniable capacity to deliver a positive contribution to the economy of a country,

5.1 Corporate Governance - Best Practices and Guidelines

5.1.1 Public Limited Company – Non Financial Institutions

involved in day-to-day operational decisions. Management is accountable to the board, and

• A company should have an audit committee as a subcommittee of the board.

5.1.2 Public Limited Company – Financial Institutions

 The responsibility of individual board members – fiduciary duties of bank’ board

State-Owned Enterprises (SOE)

There are some non-financial public enterprises in Bangladesh of which

• In Power, gas and water there are five

• Transportation and communication have eleven, and

• Trade three, Agriculture two, Construction four, and Service thirteen.

6.0 Corporate Governance of Agrani Bank

6.1 A Brief Overview of Agrani Bank

6.2 Status of Compliance Requirement of Bangladesh Bank’s guideline for Corporate

Sl. Particulars Compliance Status Explanation

No. Complied Non for non

(ii) The Board shall have its analytical

proposal, sanction, disbursement, recovery, √

(ii) The Board shall frame policies for risk

Directors shall in no way involve themselves

(ii) The Board shall frame the policies and

non-performing asset, capital base and

(ii) The Board shall frame the policies and

Directors (or Chairman of any Committee

(b) The Chairman may conduct on-site

(c) The Chairman may be offered an office-

such issues only for which he is engaged in √ Adviser)

(b) The CEO shall ensure compliance of the

(c) The CEO shall report to Bangladesh

(d) The recruitment and promotion of all

staff of the Bank except those in the two tiers

6.3 Shareholders’ Right, Ownership, Roles and Structure

Particulars Distribution of Shares

6.4 Board of Directors of Agrani Bank

Meetings of the Board during 2014

8. Abduz Jahir Chowdhury Director 20-12-2012 47

6.4.1 Director Selection policy and Independent Directors