Bangladesh Bank has set maximum rental rates for bank branches and other business premises, responding to appeals from managing directors (MDs) and senior executives across the banking sector. Under the new directive, banks can approve rental agreements within the prescribed limits using board approval alone, without seeking prior authorisation from the central bank. However, central bank permission remains mandatory if the rent exceeds the ceiling or if the property is owned by a director or someone with a vested interest. The circular outlining these guidelines was issued to all banks yesterday.
Key Provisions
Banks may now enter into lease agreements for new branches or renew existing contracts with board approval, except in the following circumstances:
The property is owned by a bank director or related party
Premature relocation of business centres before the expiry of existing leases
Rent or lease agreements for head offices or divisions that exceed prescribed limits
Banks must continue to follow previous instructions regarding advance payments, rental increases, and related expenditures.
Maximum Rental Rates by Region
Bangladesh Bank has specified region- and category-based maximum rents per square foot. The rates consider city classification, property location, floor level, and building quality.
| City / Area | Maximum Rent per sq. ft (Taka) | Category / Area Type |
|---|---|---|
| Dhaka City Corporation | 104 | Urban core |
| Dhaka ‘A’ Class Municipality | 28 | Suburban / municipal |
| Dhaka Rural Areas | 24 | Village / peripheral |
| Chittagong City | 61 | Urban core |
| Chittagong ‘A’ Municipality | 27 | Suburban |
| Chittagong Rural Areas | 20 | Peripheral |
| Rajshahi | 34 / 25 / 13 | City / municipal / rural |
| Sylhet | 40 / 22 / 16 | City / municipal / rural |
| Khulna | 34 / 21 / 13 | City / municipal / rural |
| Rangpur | 45 / 17 / 13 | City / municipal / rural |
| Barisal | 48 / 20 / 14 | City / municipal / rural |
| Mymensingh City | 36 / 19 / 14 | City / municipal / rural |
Streamlining Approvals
Bank executives highlighted that the new framework seeks to simplify leasing decisions amid growing branch expansion and relocations, which previously required lengthy central bank approvals. Several private banks, including BRAC Bank and City Bank, had faced delays of up to nine months for branch and head office rental approvals, slowing operational efficiency. In some cases, building owners leased properties to other tenants during the approval wait, putting banks at a disadvantage.
The initiative empowers bank boards to negotiate and finalise leases directly, provided there is no conflict of interest. It also allows for quicker relocation of business centres and ensures adherence to maximum rental limits.
By setting region-specific ceilings, Bangladesh Bank aims to maintain fair and reasonable rental charges reflecting local market conditions, while enhancing operational flexibility for banks across the country.
Sources: Bangladesh Bank Circulars, Bank Executive Statements