In a significant move to streamline operational logistics for the financial sector, Bangladesh Bank has introduced a comprehensive ceiling for the rental of bank branches, sub-branches, and administrative offices. This policy shift follows persistent lobbying from the Association of Bankers, Bangladesh (ABB), whose members argued that the previous requirement for individual approvals from the central bank led to debilitating delays and lost business opportunities.
Decentralising the Approval Process
Under the new guidelines, commercial banks are now empowered to finalise rental agreements or renew existing leases through their own Board of Directors, provided the rates remain within the newly prescribed limits. This autonomy aims to enhance the “ease of doing business” within the sector.
However, the central bank maintains strict oversight in specific scenarios. Prior approval from Bangladesh Bank remains mandatory if:
The property owner is a director of the bank or a “person of interest” associated with the board.
The rental rate exceeds the state-mandated ceiling.
A branch is being relocated before its current lease expires.
The lease involves the bank’s Head Office or specialised administrative departments.
Regional Rental Caps per Square Foot
The central bank has categorised rates based on geographic location and urban classification. Dhaka City Corporation remains the most expensive tier, with a maximum allowable rent of 104 BDT per square foot.
| Region (City Corporation) | Urban/City Rate (BDT) | Category ‘A’ Municipality (BDT) | Rural Area Rate (BDT) |
| Dhaka | 104 | 28 | 24 |
| Chattogram | 61 | 27 | 20 |
| Barishal | 48 | 20 | 14 |
| Rangpur | 45 | 17 | 13 |
| Sylhet | 40 | 22 | 16 |
| Mymensingh | 36 | 19 | 14 |
| Rajshahi | 34 | 25 | 13 |
| Khulna | 34 | 21 | 13 |
Addressing Market Friction
The directive comes as a relief to several private-sector institutions, including BRAC Bank and City Bank, which reportedly faced nine-month delays while awaiting central bank nods for new premises. In many instances, landlords grew impatient with the bureaucratic lag and leased their buildings to other commercial tenants, leaving banks in a precarious lurch.
The new circular emphasises that while these are maximum limits, banks must still negotiate “logically” based on the building’s age, floor level, and overall quality. Existing regulations regarding advance payments, interior decoration costs, and annual increment percentages remain in full force to ensure fiscal discipline.