Bangladesh Bank has set limit on expenses of luxurious transport and office decoration for financial institutions in order to reduce their operating expenditure.
The decision was taken against the backdrop of high spending tendency by Non-banking Financial Institutions (FIs), said a circular Bangladesh Bank issued yesterday.
FIs cannot buy motor car above Tk50 lakh and jeep above Tk1 crore, according to the circular.
The number of motor cars will be increased in accordance with the expansion of branch offices.
The vehicles used by chairman and managing directors will be replaceable at least five years after use, added the circular.
The statement on expenditure of using motor cars will be submitted to yearly and half-yearly board meetings of respective non-banking financial institutions.
Financial institutions are not restricted to use floor space above 5,000 square feet in case of new branch. The existing branches which have floor space above 5,000 square feet cannot use more space in case of branch transfer, said the circular.
FIs will not be allowed to spend more than Tk1,500 on per square feet in case of establishing new branch or shifting existing branch.
The central bank asked the FIs to emphasise basic needs and quality instead of luxury in case of furniture and other equipment.
The circular explained that higher expenditure and operating expense are affecting FIs profit negatively. As a result shareholders and clients are also being affected. In this perspective, Bangladesh Bank set the bar to expenditure in the interest of shareholders and clients.
