The interim government is preparing new rules to prevent top bureaucrats from serving as chairmen or directors of state-owned commercial banks and financial institutions, to tighten governance following years of alleged mismanagement and corruption.

Officials stated that the draft guidelines, prepared by the Financial Institutions Division under the Ministry of Finance, are part of reforms in the banking sector. The proposals set eligibility requirements for board appointments and impose term limits to ensure accountability.

According to the draft, a chairman or director may serve a maximum of two consecutive terms, each lasting three years. Reappointment would only be possible after a three-year break. Board composition must include at least one chartered or cost accountant, a lawyer, and an experienced banker.

Directors’ performance would be reviewed annually by the chairman, whose own performance would be assessed by a higher authority comprising advisers and senior ministry officials.

A government selection committee would oversee the appointment of chairmen and directors at nationalized banks and financial institutions, as well as at private banks where the state holds shares.

The move follows revelations of large-scale loan scams and capital flight during the last Sheikh Hasina administration, which ended in a mass uprising last year. Analysts say billions of dollars were laundered due to weak oversight and a lack of corporate governance.

The draft is expected to be finalised after the finance adviser returns from an overseas trip.