1 | Page

2 | Page

EXECUTIVE SUMMARY
Banking service in Bangladesh is characterized as a highly competitive
and highly regulated sector. With a good number of banks already in
operation and a few more in the pipeline, the market is becoming
increasingly competitive by the day.
With the global slowdown in the face of rising competition banks are
constantly looking for ways to develop their market and product offers to
remain ahead of others. A significant amount of regulation by Bangladesh
bank prevents the scope of introducing newer products into the market
and thereby restricts a banks ability to outperform others with a
diversified product range.
Eastern Bank Limited (EBL) is the commercial bank operating in
Bangladesh. It has over the years, created one of the largest networks
among all the local banks in Bangladesh. Having established itself as the
leading commercial bank in Bangladesh is not by itself sufficient unless a
hearty attempt is made to sustain this position. Amidst an age of
regulation and intense competition, diversification of the corporate
products in a way that helps to increase the wallet share of the bank and
thereby achieve growth is undoubtedly very desirable.
This report takes a look at the current corporate governance tools practice
by Eastern Bank Limited (EBL) to lead the way of banking industry in
Bangladesh.

TABLE OF CONTENTS
3 | Page

Sl. No.

Chapter

Page No.

CORPORATE GOVERNANCE OF EASTERN BANK LIMITED,

BANGLADESH

11

1.1

INTRODUCTION

11

1.2

OBEJECTIVES

11

1.3

METHODOLOGY

12

1.4

SCOPE

13

1.5

LIMITATIONS

13

1.6

PROBLEM STATEMENT

13

ABOUT CORPORATE GOVERNANCE

13

ORGANIZATIONAL PART OF EBL

14

3.1

INTRODUCTION

14

3.2

MISSION

15

3.3

VISION

16

3.4

VALUES

16

3.5

STRATEGIC PRIORITY

17

3.6

OBJECTIVES OF EBL

17

3.7

HISTORICAL REVIEW & DIFFERENT MILESTONES

17

3.8

AT A GLANCE- BENEFITES FROM CHANGES

18

3.9

PRIZE BOOKS OF EBL

19

3.10

BOARD OF DIRECTORS OF EBL

20

3.11

CURRENT PROFILE OF EBL

21

3.12

MANAGEMENT ASPECTS

22

3.12.1

EXECUTIVES COMMITTEE

23

3.12.2

THE AUDIT COMMITTEE & GROUP OF STRUCTURE

23

3.12.3

MANAGEMENT COMMITTEE

24

3.13

MANAGEMENT HIERARCHY OF EBL EXECUTIVE

25
4 | Page

3.14

MANAGEMENT ORGANOGRAM OF EXECUTIVE

26

3.15

CURRENT BANKING SCENARIO & EBLS POSITION

27

3.16

CREDIT RISK MANAGEMENT (PORTFOLIO

DIVERSIFICATION)

28

3.17

DEPARTMENTS & DIVISION OF EBL

28

3.18

PRODUCTS OF EBL

29

3.19

SERVICES OF EBL

30

3.20

CSR OF EBL

30

3.21

CENTER ZONE OFFICES OF EBL

31

3.22

CONCLUTION

31

CORPORATE GOVERNANCE OF EBL

32

4.1

INTRODUCTION

32

4.2

CORPORATE GOVERNANCE OF EBL

32

4.3

ANALYSIS OF CORPORATE GOVERNANCE OF EBL

32

4.4

CORPORATE GOVERNANCE CHECKLIST

33

4.5

OBJECTIVES OF CORPORATE GOVERNANCE OF EBL

35

4.6

REASON BEHIND COMPLIED

35

4.7

INDEPENDENT DIRECTORS

36

4.8

RESPONSIBILITIES OF THE CHAIRMANM OF THE

DIRECTORS

37

4.9

RESPONSIBILITIES & AUTHORITIES OF CEO

37

4.10

AUDITORS REPORT

38

4.11

REPORTING OF ANYTHING HAVING MATERIAL FINANCIAL

IMPACT TO THE COMMISSION

39

4.12

EBLS BALANCE SHEET & SOME VITAL STATISTICS

39

FINDINGS

42

5.1

SYSTEMIC PROBLEMS OF CORPORATE GOVERNANCE

42

5.1.1

DEMAND FOR INFORMATION

42
5 | Page

5.1.2

MONITORING COSTS

42

5.1.3

SUPPLY OF ACCOUNTING INFORMATION

42

5.2

TO MAINTAIN SOME PRICIPLES FOR CORPORATE

GOVERNANCE

42

5.2.1

RIGHTS & EQUITABLE TREATMENT OF SHARE HOLDER

42

5.2.2

INTEREST OF THE OTHER STAKEHOLDER

43

5.2.3

ROLE AND RESPONSIBILITIES OF THE BOARD

43

5.2.4

INTEGRITY & ETHICAL BEHAVIOR

43

5.2.5

DISCLOSURE & TRANSPARENCY

43

RECOMMENDATIONS

44

6.1

MONITORING BY THE BOARD OF DIRECTORS

44

6.2

BALANCE OF POWER

44

6.3

EXTERNAL CORPORATE GOVERNANCE CONTROLS

44

CONCLUSIONS

45

8.

REFERENCES

46

6 | Page

7 | Page

CORPORATE GOVERNANCE OF EASTERN BANK LIMITED,

BANGLADESH
1.1 INTRODUCTION:
This assignment has been prepared as a requirement of BBA program. Eastern bank limited is the
leading commercial bank in this country. To maintain its leading position in the Bangladesh, Eastern
Bank Limited is always keen to develop long term beneficial relationship with trustworthy clients. To
achieve this end, they have always upgraded their approaches to achieve profitability. The report on
Corporate Governance of Eastern Bank Limited is initiated as part of learning, which is a BBA
degree requirement of the department of MANAGEMENT STUDIES, Jahangirnagar University.
Since the BBA program is an integrated, practical and theoretical method of learning, the students of
this program are required to have practical exposure in any kind of business organization as last term of
this course.
1.2 OBEJECTIVES:
The main objective of the report is to explore the corporate governance of eastern bank limited in the
banking sector of Bangladesh.
And other objectives are given below1. Briefly observe the banking environment of Bangladesh and look at Eastern Bank Limited (EBL) as
2.
3.
4.
5.
6.
7.
8.

an organization at some length.

Identify the major strengths of the bank customer service division.
Market scenario of banking sector and the current position of eastern bank Limited.
To know about the overall banking activity.
To find out sustainable position of Eastern Bank Limited.
To know about the management style and organization structure of Eastern Bank Limited.
To identify the problem and weakness of the banking system of Eastern Bank Limited.
To suggest necessary measures for the development of the bank.

1.3 METHODOLOGY:

8 | Page

In the organization part, much information has been collected from different published articles,
journals, brochures, web sites and previous internship report. All the information incorporated in this
report has been collected both from the primary sources and as well as from the secondary sources.
1.3.1 Primary sources of information
1.
2.
3.
4.

1.3.2 Secondary sources of information

Observation of the internship period.

Operation process.
Discussion officials of the EBL
Data from the companys documents
and

Eastern

Bank

Limited

computerized information system.

5. Data from the internet of Eastern Bank
Limited (EBL).

1. Balance sheets and profit and loss

accounts of Eastern Bank Limited.
2. Relevant Eastern Bank Limited paper
and published documents.
3. Banks other published documents.
4. Banks other published information
some text books.
5. Internet of Eastern Bank Limited.

The primary data relating to problems involved in Corporate Governance practice and suggestions to
remove the same were collected on the basis of a questionnaire by interviewing 24 randomly selected
Bank personnel such as Directors of the Board as the internal part of management and the Auditors as
the external group.
The secondary data were collected through an extensive literature survey on the subject. The study has
identified some major problems in Corporate Governance practice in the Banking Industry of the
country. The prospect of Corporate Governance practice is bright in Banking Industry in the country as
reported by the respondents if problems are removed by the concerned management of the Banks as
well as Bangladesh Bank management as the guardian of commercial Banks.

1.4 SCOPE:
The scope of the report is limited to the overall descriptions of corporate governance of the bank, its
services, its position in the industry, and its competitive advantage. The scope is also defined by the
9 | Page

organizational set-up functions, and performances. Here Eastern Bank Limited has been compared in
different aspects and derivatives of management accounting tools with foreign and local banks as well.
1.5 LIMITATIONS:
Information at the bank is confidential and critical.
The findings are not statistically validated.
Limitation of time was one of the most important factors that shortened the present study.
Rush hour & business was another reason that act as acts as an obstacle while gathering data.
1.6 PROBLEM STATEMENT:
Eastern bank limited (EBL) is one of the leading first generation private sector banks in our country.
Such banks come into operation following the decision that the government of Bangladesh took almost
two decades back to allow private banks to operate side with the Nationalized Commercial Banks.
Todays business operates in the dynamic complex environment as they are affected by STEP
(sociologically, Technologically, Economical, and political) factors, internal competition, and the
increasing bargaining power of suppliers and customers. These forces have rapidly altered todays
business environment. In ordered to survive in the changing business environment organization should
rethink their strategic philosophy and the role of management.
2. ABOUT CORPORATE GOVERNANCE:
Corporate governance is the set of process, customs, policies, laws and affecting the way in which
corporation is directed, administered and controlled. The United Kingdom Cadbury Report (Cadbury,
1992, p.15) defined corporate governance as the system by which companies are directed and
controlled.
As for example, Asian Development Bank (ADB) describes corporate governance as (i) a set of rules,
that define the relationship between shareholders, managers, creditors, the government and
stakeholders, (ii) a set of mechanism that help directly or indirectly to enforce these rules (Asian
Development Bank, 2000, p. 5).
Corporate Governance ensures to bring transparency, accountability and professionalism in the
management system of a corporate body that enhances the credibility and acceptability to the

10 | P a g e

shareholders, employees, potential investors, customers, lenders, governments and all other
stakeholders.
This is truer in case of Banking Industry. Since Banks deal in public money, public confidence is of
outmost importance in this Industry. The study aims at finding out problems & deficiencies involved in
Corporate Governance practice in Banking Industry in Bangladesh and also suggesting ways and
means to remove the same in order to make the Corporate Governance practice sound and effective. In
this study, both the primary and secondary data were used.
3 ORGANIZATIONAL PART OF EBL:
3.1 INTRODUCTION:
The emergence of Eastern Bank Limited in the private sector is an important event in the banking
industry of Bangladesh. Eastern Bank Limited started its business as a public limited company on
August 08, 1992 with the primary objectives to carry on all kinds of banking business in and outside of
Bangladesh and also with a view to safeguard the interest of the depositors of erstwhile BCCI [Bank of
Credit and Commerce International (Overseas)] under the Reconstruction Scheme, 1992, framed by
Bangladesh Bank.
In 19991, when BCCI had collapsed internationally, the operation of this bank had been closed in
Bangladesh. After a long discussion with the BCCI employees and taking into consideration the
depositors interest, Bangladesh Bank then gave the permission to form a bank named Eastern Bank
Limited which would take over all the assets, cash and liabilities of erstwhile BCCI in Bangladesh,
with effect from August 16, 1992. So, it can be said the EBL is a successor of BCCI.
EBL started its business as a scheduled bank with only four branches, which included Principal Branch,
Dhaka; Motijheel Branch, Dhaka; Agrabad Branch, Chittagong and Khulna Branch. EBL started its
business with motto to grow as a leader in the banking arena of Bangladesh through better counseling
and efficient service to clients. EBL resumed its operational activities initially with an authorized
capital of Tk. 1000 million, divided into 10 million shares of Tk. 100 each and paid up capital of Tk.
310 million. The initial shareholders were the NCBs, various govt. agencies, and some of the
depositors who had agreed to accept shares in the new bank in lieu of their deposits.

11 | P a g e

The first Board of Directors of EBL constituted under govt. supervision, consisted of 7 directors from
various business and professions. Eastern Bank Limited was under government control until the end of
2000 and therefore, there were lots of deficiencies in the Banks management. In 2001, the board of
directors brought in new professional management from various foreign banks who have been trying to
modernize the bank ever since.
3.2 MISSION:
EBL will deliver service excellence to

3.3

customers, both internal and external.

EBL will constantly challenge their
systems, procedures and training to
maintain a cohesive and professional
team in order to achieve service

excellence.
EBL will

create

an

enabling

environment and embrace a team based

culture where people will excel.

EBL will ensure to maximize
shareholders value.

12 | P a g e

3.4 VISION: The vision of Eastern Bank Limited is to become the bank of choice by transforming the
way they do business and developing a truly unique financial institution that delivers superior
growth and financial performance and be the most recognizable brand in the financial services in
Bangladesh.

3.5
3.6
3.7 VALUES: EBL see their customers trust as the lifeline of their business, control and compliance as
their license to operate, dynamic and motivated people as their strength to multiply and technology
as their weapon to service excellence.

Service excellence
Openness
Trust
Commitment
Integrity
Responsible corporate citizen
13 | P a g e

3.8 STRATEGIC PRIORITY:

Integrate sustainable principles into Business strategy.
Shift to values-based marketing, focuses on human aspirations, values, sprites.
Strengthen internal controls through clearly laid down policies, productions & process
Pursue a moderate asset growth keeping the asset quality intact.
Optimize funding mix to reduce cost of fund.
Accelerate deposit growth by offering innovative products.
3.9 OBJECTIVES OF EBL:
3.10

Maximization of profit along with the benefits of employees is the main objective of the bank.

In addition, the other objectives are:

3.11
3.12
3.13

To be one of the leading banks of Bangladesh in terms of ROE and ROE.

To be the market leader in high quality banking products and services.
Achieve excellence in customer service through providing the most modern and advanced stateart technological in the different spheres of banking.
Cater to a broader and differentiated segment of retail and wholesale customers.
To grow its credit extension service to the commercials as well industrial sector;
To increase its diversification of loan portfolio and geographical coverage.
To curd present operating expenses further so as to increase earnings before tax.
To reduce the burden of nonperforming assets.
HISTORICAL REVIEW & DIFFERENT MILESTONES OF EBL:
In the year of 1992 EBL started their banking operation in the country. Within these 15 years

EBL became one of the successful banks in Bangladesh. They are able to gain this huge success
because of their employees honesty, integration and hard work.
3.14

EBL dreams to be the bank of choice of the general public which includes both the consumer

and the corporate clients. It has adopted the tag line simple math, the philosophy of Easy Banking
while celebrating the 10th anniversary in 2002, EBLs logo was changed to reflect the restricting
and the transformations it is going through; the colors of the new logo signify the vibrant green of
mother earth, a blue sky full of possibilities and a yellow rising sun of hope.
3.15

In order to achieve superior growth and financial performance for its shareholders, EBL is

radically transforming the way it dies business .The bank has already restructured from the
14 | P a g e

traditional geographic matrix (branch based banking) to business unit matrix. The bank is also
centralizing most of the business functions in the head office to ensure greater control and
efficiency.
3.16

EBL wanted to stand up in the crowd. For moving out of the ramshackle, EBL management

under the dynamic leadership of the honorable Directors of the Board switched over to a centralized
platform using a world renowned banking software (Flex cube) which was the no one most popular
software in the world for the year 2003. The bank also centralizing most of the business functions
in the head office to ensure greater control and efficiency. The result has been incredible.
3.17

AT A GLANCE- BENEFITES FROM CHANGES:

3.18

List of few benefits from centralization are mentioned below:

Standalone systems= > Centralized system

Branch Banking= > Anywhere Banking
EOD at Branch= > EOD at Data Centre
Telegraphic Transfers= > Online Inter-branch transfer
Hold accounts= > Online Inter-branch transfer
Produce MIS at Branch= > Centralized MIS
Poor Control reports= > Improved Control reports
Audit needs branch visit= > MIS available at Head Office
Information on paper= > Information in CIF
On Card Signature/Pix= > Digital Signature/Pix
No Funds Management= > Automatic Sweep-in/Out

3.19
3.20
3.21
3.22 PRIZE BOOKS OF EBL:

15 | P a g e

3.23
3.24

BOARD OF DIRECTORS OF EBL:

3.25

NAME

3.26

1. Mr. Mir Nasir Hossain

POSITION
3.27

Chairman

2. Ms. Aneela Haque

3.28

Director

3. Mr. G. M. Shakhawat Hossain

3.29

Director

4. Mr. M. Showkat A. Chowdhury

3.30

Director

5. Mr. A. M. Shaukat Ali

3.31

Director

6. Mr. Asif Mahmood

3.32

Director

7. Mr. Ahmed Qamrul Islam Chowdhury

3.33

Director

8. Mr. M. M. Abdur Rahim

3.34

Director

9. Mr. Mohd. Noor Ali

3.35

Director

10. Mr. Ali Reza Iftekhar

11. Mr. Safiar Rahman

3.36

Managing Director & CEO

3.37

Company Secretary

3.38

16 | P a g e

3.39

3.40

CURRENT PROFILE OF EBL:

3.41

EBL is a leading private sector bank in Bangladesh offering full range of Personal, Corporate,

International Trade, Foreign Exchange, Lease Finance and Capital Market Services. At present, this
can be said; Eastern Bank Limited is the preferred choice in banking for friendly and personalized
services, cutting edge technology, tailored solutions for business needs, global reach in trade and
17 | P a g e

commerce and high yield on investments, assuring Excellence in Banking Services. Within very
short span of time EBL is going to open five more branches in the country. EBL is start strengthen
their consumer products along with their corporate products; as they lunched Simple Credit Card
in the market recently.
3.42

At present, the bank has 32 branches throughout the country with about 850 employees. The

existing Board of Members is 12. Mr. A. Q. I. Chowdhury, OBE is the Chairman of Board and Mr.
Ali Reza Md. Iftekhar is the Managing Director & CEO. EBL is currently going through a
restructuring stage where the traditional Branch Banking System` is gradually discarded and being
replaced by a Centralized System till 2000. The bank has been restructured into five main
businesses which is responsible for earning the revenues of the bank. These are:

3.43

Corporate Banking
Consumer Banking
SME Banking
Treasury
Cards
All other departments of the bank act as support for these five units and help them in every

possible way. Under this arrangement, the responsibilities and functions of those branches have
been reduced dramatically. Many of the activities like credit evaluation and approval, monitoring of
loans, trade services activities etc. are now centralized in the Head Office. The branches of the bank
are now termed as the Sales & Service Centers which are solely concentrated on delivering
services to the corporate and consumer clients and maintain relationship with them.
3.44

2006, last year was another year of continued success of EBL across all the business units. The

Bank has made an Operating Profit growth of 28.6% to BDT 1,358 million during the year but
suffered a decline of Profit after Tax by 6.1% to BDT 513 million mainly due to increased general
provisioning requirement by BB and disallowance of specific provision in tax computation.
Therefore EPS dropped to BDT 61.98 in 2006 against BDT 66.00.
3.45

Corporate Banking remains the major bread earner with largest volume of loan portfolio and

fees income. Adding 3 more branches at strategic locations, Consumer Banking supplied the major
part of funding assets of corporate and SME, one of the potential business segments. EBL Treasury
18 | P a g e

has passed a superb year 2006 by achieving an extraordinary growth of FX income by 130% to the
tune of BDT 434 million by exploiting market volatility. Investment income also grew by 47.48%
due to governments increased borrowing at higher rates.
3.46

MANAGEMENT ASPECTS:

3.47

The EBL Management Team comprises of a group of people and each of them comes with an

international working background and is committed in leveraging their experiences to take EBL to
greater heights by ensuring top line revenues with dynamic capabilities. This Management Team is
unique in being able to envision the need of the business by bringing in admixture of advanced
technology solutions know-how and revamping the organizational make-up for maximum
profitability. Other than the CEO, the remaining Management Team Members each lead a
functional department.
3.48

This mix of people is persistent to provide unparallel services to its customers, come up with

timely and innovative products and services and to enhance the capabilities of its people of its
people while emphasizing on the latest technology. This they believe will take the Bank to a
foremost position in the country by the turn of the year 2007. This team is to drive the business to
maximize the operational excellence and efficiency through acquisition of talent, developing
systems, processes and people and through blending of these to let customers revel in with
fulfillment and permanency.
3.49

Like any other business organization, all the major decisions in EBL are made by the top

management Committee. The board mainly establishes the objectives and policies of the bank.
There are three (3) committees of the board for different purposes:
3.50
3.51
3.51.1 EXECUTIVES COMMITTEE:
3.52

In compliance with the BRPD circular no. 16 dated July 24, 2003 the board of Directors of EBL

has reconstituted its Executive Committee in its 352the Board Meeting and was duly confirmed by
the Board. This committee is comprised of four non-executive Directors and Managing Director of
19 | P a g e

the bank and the functions and responsibilities of this committee is to Establish and periodically
review the banks overall credit and lending policies and procedures, develop and implement
uniform and minimum acceptable credit standards for the bank, new credit proposal assessment and
approval etc.
3.52.1 THE AUDIT COMMITTEE & GROUP OF STRUCTURE:
3.53

The main objective of this committee is to assist Board of Directors with regard to the audit of

financial reports, management reports by external auditors, internal controls and internal audits.

20 | P a g e

3.54

3.54.1 MANAGEMENT COMMITTEE:

21 | P a g e

3.55

Name

3.56

1. Ali Reza Iftekhar

2. Mamoon Mahmood Shah
3. Md. Sirajul Islam

3.57
3.58

5. Malick Musfique Reza

6. Md. Fakhrul Alam
7. Syed Rafiqul Haq
8. Ehsan Khasru
9. Muklesur Rahman
10. Noor E Alam Chowdhury
11. Safiar Rahman

Managing Director & CEO

SEVP & Head of Consumer Banking

3.59

4. Mahbubul Alam Tayiab

Position

SVP & Head of Human Resources

3.60
3.61
3.62
3.63
3.64

EVP & Head of Operations

SAVP & Head of Finance & Accounts

EVP & Area Head, Corporate Banking,
CTG
Head of Unit 5, Corporate Banking,
Dhaka
Head of Credit Risk Management
3.65

Head of SME Banking

3.66 Head of IT
3.67 Company Secretary

3.68
3.69

Mid and lower level employees get the direction and instruction from the top executives about

the duties and tasks they have to perform. Management of Eastern Bank Ltd. assumes that; active
employees are the inputs to achieve the organization goal. The manager provides the guidelines and
broad directions to the subordinates but delegate responsibility for determining how tasks and goals
are to be accomplished.
3.70

22 | P a g e

3.71

MANAGEMENT HIERARCHY OF EBL EXECUTIVE:

3.72

23 | P a g e

3.73
3.74

MANAGEMENT ORGANOGRAM OF EBL EXECUTIVE:

M
ae c
ES x
e
n
V
i n i o
n
a
S
e
u
t
i
v
F
i
r
si t
i
o
r
A
s
s
c
e
S
e
n
i
g
i
n
r
PM
r
i
e
A
s
s
i
s
t
a
n
a
V
i
c
s
t
a
n
S
e
P
r
o
r
O
f
f
i
g
A
s
s
i
s
t
n
c
i
Cg aeeio
n
t
r
V
c
e
n
t
m
e
t
n
i
e
s
i
P
r
i
n
c
e
r
D
i
r
a
n
t
p
l
a
c
t
u
a
l
P
r
e
s
V
i
c
e
n
t
P
r
e
V
i
c
e
o
r
d
e
c
i
p
a
l
(
E
n
e
c
t
V
i
c
e
O
f
f
O
f
f
i
c
e
i
d
e
n
P
r
e
s
i
T
a
i
n
sP
i
d
e
r
e
s
O
f
n
t
is i
tdc r rte
o
P
reefyrfen
iO
t
e
n
t
i cd
e vrn
fL
id ceee
( Er n nt rt y

24 | P a g e

e e r lt
L
e
L
e

3.75
3.76

)v
y
v

e l )
e l )

3.77
3.78

CURRENT BANKING SCENARIO OF BANGLADESH & EBLS POSITION IN THE

MARKET:
3.79

From the beginning of the year 2004, the entire banking industry in Bangladesh started facing

stiff competition to procure business, under the changed circumstances of the policy of BB to lower
the rates of interest in lending and to go for syndication against large loan portfolios with the
objective to ensure better operation and control of all functions of the bank.
3.80

Despite such situation the year was a remarkable on for EBL when the bank finally completed

the introduction of a state-of-the art IT technology platform of Flex Cube, a world class banking
software. All of banks 25 branches were connected to this IT platform giving an enviable
opportunity to all the EBL customers to obtain the most coveted services that no other bank could
offer them yet.
3.81

Customers of new century are self-motivated, vigilant and informed about the market

conditions, further more development of information technology and telecommunication systems

created an environment whereby customers demand convenience, reasonable priced better quality
financial products and personalized services. Customer demand together with technological
advancement created new challenges and opportunities in the banking sector in Bangladesh.
Adapting realistic and timely business policies, investments in IT are now prejudicing to stay at the
edge of this assertive and competitive banking business of the country. Invention of new financial
products and services and introduction of new delivery methods are the key concern of staying
close to customers.
3.82

To cope with the status quo, Eastern Bank Limited welcomed these developments and

restructured the bank to meet the challenges in future. The branches of the bank are now termed as
the Sales & Services Center which are solely concentrated providing service to the corporate and
consumer clients and maintain relationship with them.
25 | P a g e

3.83

2006, last year was another year of continued success of EBL across all the business units. The

Bank has made an Operating Profit growth of 28.6% to BDT 1,358 million during the year but
suffered a decline of Profit after Tax by 6.1% to BDT 513 million mainly due to increased general
provisioning requirement by BB and disallowance of specific provision in tax computation.
Therefore EPS dropped to BDT 61.98 in 2006 against BDT 66.00.
3.84 Corporate Banking remains the major bread earner with largest volume of loan portfolio and

fees income. Adding 3 more branches at strategic locations, Consumer Banking supplied the major
part of funding assets of corporate and SME, one of the potential business segments. EBL Treasury
has passed a superb year 2006 by achieving an extraordinary growth of FX income by 130% to the
tune of BDT 434 million by exploiting market volatility. Investment income also grew by 47.48%
due to governments increased borrowing at higher rates.
3.85

CREDIT RISK MANAGEMENT (PORTFOLIO DIVERSIFICATION):

3.86

Comprehensive risk management is a core competence of EBL. EBL take a prudent and

conservative approach to risk that is fully aligned with their long-term strategy. The risk framework
combines centralized policy setting with board oversight supported by risk execution and
monitoring. It provides management with the ability to oversee the banks large and highly
diversified portfolio effectively and efficiently.
3.87

EBLs risk management systems are designed to identify and analyze risks management

processes by establishing a credit risk management policy, credit underwriting standards, and credit
risk rating methodology. It also established a Credit Risk Management Division, which is
independent from relationship management units to ensure proper controls on its lending.
3.88

DEPARTMENTS & DIVISION OF EBL:

3.89

These are the main divisions; the structures and functions of each of these divisions are given

below:
3.90
Serial
3.94

3.91
3.95

Name of Departments
Audit

&

3.92

Serial
Compliance 3.96

3.93

Name of Departments

3.97

SME Banking Divisions

26 | P a g e

Division
Finance

3.98

3.99

2
3.102

Division
3.103 Human

3
3.106

Department
3.107 Corporate

4
3.110

Divisions
3.111 Treasury Departments

5
3.114

3.115 Consumer

6
3.118

Divisions
3.119 Brand

7
3.122

Divisions

&

Accounts 3.100

3.101 Credit

9
Resources 3.104

Divisions
3.105 Credit

10
Banking 3.108
11
3.112

12
Banking 3.116
13
Management 3.120

Risk

Management
Administration

Departments
3.109 Operations
3.113 International Divisions
3.117 Information

Technology

Divisions
3.121

3.123 PRODUCTS OF EBL:

3.124 Consumer Products
1. Loan Products
3.125
2.Deposit Products
3.126
3. SME Banking Products
3.127 EBL Jibandhara 3.128
3.129
Interesting 3.130
3.131 Loan Products
Loan
3.132 EBL Utshab Loan

Account
3.133
3.134

Campus 3.135
3.136 EBL Agrim

3.137 EBL Home Loan

Account
3.138
3.139

High 3.140
3.141 EBL Uddog

Performance
3.142 EBL Fast Cash
3.143
3.144 EBL Repeat
3.145
3.146 EBL Asha
3.147 EBL Fast Loan
3.148
3.149 EBL Confidence 3.150
3.151 EBL Puji
3.152 EBL Executive 3.153
3.154
EBL
Just 3.155
3.156 EBL Banijjo
Loan
3.157 EBL Auto Loan
3.162 EBL Travel Loan
3.166 EBL Parse loan

Double
3.158
3.159
3.160
3.161 EBL Mukti
3.163
4.Cards Products
3.164
3.165
3.167
3.168 Simple Credit 3.169
5. Deposit Products

Card
3.170 Education Finance 3.171
3.172 Lifestyle Card

3.173
3.174 EBL Subidha

Pack
3.175
3.176
27 | P a g e

3.177

3.178 SERVICES OF EBL:

3.179 Services offered by Consumer Banking

3.180 Services offered by SME Banking

3.181 Locker Services

Division
3.182 Debit Card (Visa Electron) Facility

3.183 EBL 5 to 9 (Evening Banking)

3.184 Online Banking

3.185 Online Banking

3.186 Internet Banking

28 | P a g e

3.187 EBL Visa Electron Card

3.188 Bill Payment Facility

3.189 Utility Services Bill Collection

3.190

3.191 Tuition Fees Collection

3.192

3.193 Student File

3.194

3.195 Simple Credit Card

3.196

3.197 Local Classic

3.198

3.199 Local Gold

3.200

3.201 Dual Classic

3.202

3.203 Dual Gold

3.204

3.205
3.206 CSR OF EBL:
3.207 In this 21st century, the social responsibility of an organization is unavoidable. The societal
marketing concept holds that the organization should determine the needs wants, and interests of
target markets. It should then deliver superior value to customers in a way that maintains or
improves the consumers and the societys well-being. In this concept the marketers will maximize
the consumers value in the long run rather than short run to maximize their profit.
3.208 The bank realizes the importance of contributing to the public, community, and society as a
whole as well as participating in environmental protection and conservation for a sustainable future.
EBL ensures that the customer already having production facility that is susceptible to damage
environment has due environmental clearance certificate from the concerned ministry while
granting or renewing credit facility.
3.209 Every year EBL contribute their in various types of social activities, are; awarding the talent
student through talent hunt, monetary contribution in the disable fund, contribute increasing
public awareness about the social ills and the most recently EBL contributed BDT 320 million in
the Chief Advisors fund for the flood affected people. No one in society can avoid the due
responsibilities, EBLs position is positive in this regard and they wish to find a suitable segment to
work with in future to meet the corporate social responsibility.
3.210
29 | P a g e

3.211 CENTER ZONE OFFICES OF EBL:

3.212 Center zone offices of EBL

1) EBL Head Office

3.213 Jiban Bima Bhaban 10, Dilkusha C/A Dhaka

2) Corporate Banking Office

Dhaka
3) Corporate Banking Uday Tower Office

3.214 Jiban Bima Bhaban 10, Dilkusha C/A Dhaka Phone:

PABX
3.215 Uday Tower (1st Floor) Plot: 57 & 57/A Gulshan
Avenue (South) Dhaka

4) Gulshan Cards Center

3.216 Sabera Tower (5th ), House 42, Road

3.217
3.218
3.219 CONCLUTION:
3.220 Since banks deal with customers hard earned cash and finances business, it is natural financial
organization largely depends on the service quality, promotional activity, personnel effort and
distribution. EBL is the first local private bank in Bangladesh which has implanted the strategy of
Centralization. The ultimate goal of following this strategy is to maximizing the profit and also
reduces the amount of bad debts and in most reduces the internal conflicts. EBL has diversified its
assets and remittance, loan portfolio and now EBL is focusing on establishing a leading small and
medium enterprise as well as adding value added consumer banking products to satisfy its
customers better as it lunched Simple Credit Card with the fullest possibilities of modern credit
card. It has restructured its business process to meet the challenges of rapidly evolving technology
based banking services, in the awake of growing competition in the financial service industry and
changes in the customer needs.

30 | P a g e

4. CORPORATE GOVERNANCE OF EBL:

4.1 INTRODUCTION:
3.221 Corporate Governance is based on several critical principles. They include an independent,
active and engaged Board of Directors which has the skill to properly evaluate and oversee the
business process, business and financial performance, internal control and compliance structure and
direct management on strategic and policy issues. On the other hand, the Board has to ensure that
the management headed by Chief Executive Officer (CEO) fully discharge their day to day
administrative responsibilities prescribed by BB and the Board itself and necessarily refrain
themselves from micro management of the management affairs. Eastern Bank Ltd. recognizes the
importance of good corporate governance as a major factor in enhancing the efficiency of the
organization. The Bank therefore seeks to encourage the conduct of its business to be in line with
the principles of good corporate governance, which form a basis for sustainable growth.
4.2 CORPORATE GOVERNANCE OF EBL:
3.222 In absence of any specific, integrated and mandatory Corporate Governance instructions,
various rules and guidelines by different regulatory bodies constitute an informal structure of
Corporate Governance. EBL understands that all these rules and guidelines aim at establishing and
maintaining a delicate balance of authority and responsibility conferred on the Board, the collective
representatives of shareholders, and the management to safeguard the interest of key stakeholders
i.e. depositors and shareholders. Two very important pillars of a good corporate governance
structure are Transparency and Accountability backed by strong Internal Control and
Compliance Structure and MIS capabilities.
4.3 ANALYSIS OF CORPORATE GOVERNANCE OF EBL:
3.223 The only guideline regarding Corporate Governance so far issued by Securities & Exchange
Commission (SEC) vide letter no SEC/CFD/246/2006-2378 dated January 26, 2006 is currently
being followed by Banks, although not mandatory yet.
3.224
3.225
31 | P a g e

4.4 CORPORATE GOVERNANCE CHECKLIST:

3.226 Status of Compliance with the conditions imposed by the Securities and Exchange Commission
Order no, SEC/CMRRCD/2006-158/Admin/02-08 dated 20 February, 2006 issued under section
2CC of the Securities and Exchange Ordinance, 1969.
3.227 Provided, however, that 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 in accordance with the condition No.5. (Report under
Condition No.5.00)
3.228 C

3.229 Title

onditi

3.230 Com
pliance

on

Status.

3.231 1.

3.232 Board of Directors (BOD):

0
3.234 1.

3.233 Com
plied

3.235 Boards Size (Should not be less than 5 but not more than 20)

1
3.237 1.

3.236 Com
plied

3.238 (i) Independent Directors (At least 1/10th i.e. minimum one)

2
3.240 1.

3.239 Com
plied

3.241 (ii) Appointment of Independent Director

2
3.243 1.

3.242 Com
plied

3.244 Separate Chairman & CEO and their clearly defined roles

3
3.246 1.

3.245 Com
plied

3.247 Directors Report to Shareholders:

4
3.249 1.

3.248 Com
plied

3.250 (a ) Fair presentation of Bank financials

4
3.252 1.

3.251 Com
plied

3.253 (b) Maintenance of proper books of account

4
3.255 1.

3.254 Com
plied

3.256 (c) Adoption of appropriate accounting policies and estimates

4
3.258 1.

3.257 Com
plied

3.259 (d )Compliance with Inter. Accounting Standard

4
3.261 1.

3.260 Com
plied

3.262 (e) Soundness of Internal Control System

3.263 Com
plied

32 | P a g e

3.264 1.

3.265 (f) Ability to continue as a going concern

4
3.267 1.

3.266 Com
plied

3.268 (g) Significant deviations in operating results from

4
3.270 1.

3.269 Com
plied

3.271 (h) Presentation of key operating and financial data at least 3 3.272 Com

4
3.273 1.

years
3.274 ( i) Declaration of Dividend

4
3.276 1.

3.277 ( j) Number of Board Meetings held and attendance by each 3.278 Com

4
3.279 1.

Director
3.280 ( k) Shareholding pattern.

4
3.282 2.

3.283 CFO, Head of Internal Audit (HoIA) and Company Secretary 3.284 Com

0
3.285 2.

(CS):
3.286 Appointment of CFO, HoIA and CS and their clearly defined 3.287 Com

1
3.288 2.

roles
3.289 Attendance of CFO & CS in the Board of Directors Meeting.

2
3.292 3.

3.290 CFO attends the Meeting as end when required.

3.293 Audit Committee:

0
3.295 3.

3.296 Constitution of Audit Committee:

1
3.298 3.

3.297 Com
plied

3.299 (i) Size of the Audit Committee (at least 3 members)

1
3.301 3.

3.300 Com
plied

3.303 (ii) Audit Committee comprised of Board members including 3.304 Com

plied
3.275 Com
plied
plied
3.281 Com
plied
plied

independent director(s).

plied
3.291 Com
plied
3.294 Com
plied

plied

3.302
3.305 3.

3.306 (iii) Filling of casual vacancy in the Audit Committee.

1
3.308 3.

3.307 Com
plied

3.309 (i) Selection of Chairman of the Audit Committee.

2
3.311 3.

3.310 Com
plied

3.312 (ii) Professional qualification and experience of the Chairman 3.313 Com

2
3.314 3.

of the Committee.
3.315 (i) Reporting to BOD on the activities of the Audit 3.316 Com

3.1
3.317 3.

Committee.
3.318 (ii) Reporting of conflict of interest to the BOD.

plied
plied

3.319 Com
plied
33 | P a g e

3.1
3.320 3.

3.321 (ii) Reporting of any fraud to the BOD.

3.1
3.323 3.

3.322 Com
plied

3.324 (ii) Reporting of suspected infringement of laws to the BOD.

3.1
3.326 3.

3.325 Com
plied

3.327 (ii) Reporting of any other matter to the BOD.

3.1
3.329 3.

3.328 Com
plied

3.330 Reporting of anything having material financial impact to the 3.331 Com

3.2

Commission.

plied

3.332 3.

3.333 Reporting of activities to the shareholders and general 3.334 Com

4
3.335 4.

investors.
3.336 External/Statutory Auditors:

0
3.338 4.

3.339 (i)Appraisal or valuation services or fairness

1
3.341 4.

3.342 (ii)Design and implementation of Financial Information 3.343 Com

1
3.344 4.

System.
3.345 (iii)Book keeping or any other related services

1
3.347 4.

3.348 (iv) Broker or dealer services.

1
3.350 4.

3.349 Com
plied

3.351 (v)Actuarial services.

1
3.353 4.

3.352 Com
plied

3.354 (vi)Internal audit services

1
3.356 4.

3.355 Com
plied

3.357 (vii)Any other services determined by the Audit.

3.358 Com
plied

1
3.359

plied
3.337 Com
plied
3.340 Com
plied
plied
3.346 Com
plied

3.360
3.361
4.5 OBJECTIVES OF CORPORATE GOVERNANCE OF EBL:
3.362 For excellence in Corporate Governance, the most important processes one has to concentrate
on are:
34 | P a g e

Strategy Process, which provides: A link between Strategy & Operations, Sets up a

mechanism for Strategy Review

People Process, which provides: A link between People & Operations
Operations Process, which provides: A link between Strategy & People The link between
Core Objectives of Corporate Governance and the important processes is the structure of the

corporate & the systems through which the activities are organized and executed.
3.363
4.6 REASON BEHIND COMPLIED:
Board of Directors (BOD):
Boards Size: The number of the board members of the company should not be less than 5 (five)
and more than 20 (twenty).
3.364 Provided, however, that in the case of banks and non-bank financial institutions, insurance
companies and statutory bodies for which separate primary regulators like Bangladesh Bank,
Department of Insurance etc. exist, the Board of those companies should be constituted as may be
prescribed by such primary regulators in so far as those prescriptions are not inconsistent with the
aforesaid condition. Eastern Bank Limited (EBL) board consists with the 10 members and their
name given below.
3.365
3.366
3.367
3.368
3.369
3.370

35 | P a g e

4.7 INDEPENDENT DIRECTORS:

3.371 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
the following:3.372 At least one tenth (1/10) of the total number of the companys board of directors, subject
to a Minimum of one, should be independent directors.
3.373 For the purpose of this clause
1. 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.
2. Not connected with the companys promoters or directors and 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.
3. Who does not have any other relationship whether pecuniary or otherwise, with the company
or its subsidiary/associated companies
4. 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.
3.374 Eastern Bank Limited (EBL) independent directors free from any interest or any business
or other relationship which could, or could reasonably be perceived to, materially interferes
with the directors ability to act with a view to the best interests of the company.
1. He is not a member of management.
2. Not a substantial shareholder of the company or an officer of or otherwise associated directly
or indirectly with a substantial shareholder of the company.
3. Not within the least three years been employed in an executive capacity by the company or
any other group member or been a director after ceasing to hold any such employment.
4. Not a principal or a professional adviser to a company or another group member.
5. Not a significant supplier or customer of the company.
3.375
4.8 RESPONSIBILITIES OF THE CHAIRMANM OF THE BOARD OF DIRECTORS:
1. As the chairman of the board of directors does not personally possess the jurisdiction to
apply policymaking or executive authority, he not participates in or interferes into the
administrative or operational and routine affairs of the bank.

2. 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 banks 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 effect necessary
action thereon in accordance with the set rules through the CEO.
3. The chairman 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 approval of the board.
4. Leading the board of directors.
5. Obtaining contributions from other board members in the boards deliberations is crucial to
ensure that the board works effectively.
3.376
4.9 RESPONSIBILITIES & AUTHORITIES OF CEO:
3.377 The CEO of the Eastern Bank Limited (EBL), Mr. Ali Reza Iftekhar, shall discharge the
responsibilities and affect the authorities as follows

In terms of the financial, business and administrative authorities vested upon him by the
board, the CEO discharges his own responsibilities. He remains accountable for

achievement of financial and other business targets by means of business plan.

The CEO ensures compliance of the Bank Companies Act, 1991 and/or other relevant

laws and regulations in discharge of routine functions of the bank.

The CEO reports to Bangladesh Bank of issues in violation of the Bank Companies Act,

1991 or of other laws/regulations and, if required, may apprise the board post facto.
The recruitment and promotion of all staff of the bank except those in the two tiers below
him rest on the CEO. He acts in such cases in accordance with the approved service rules
on the basis of the human resources policy and approved delegation of employees as

approved by the board.

4.10 AUDITORS REPORT:
1. We have obtained all the information and explanations which to the best of our knowledge
and belief were necessary for the purposes of our audit and made due verification thereof.
2. In our opinion, proper books of account as required by law have been kept by the Bank so
far as it appeared from our examination of those books and proper returns adequate for the
purposes of our audit have been received from branches not visited by us.
3. The Banks Balance Sheet and Profit and Loss Account together with the annexed notes 1 to
44 dealt with by the report are in agreement with the books of account and returns.

4. The expenditure incurred was for the purpose of the Banks business.
5. The financial position of the Bank at 31 December 2007 and the profit for the years then
ended have been properly reflected in the Financial Statements, the Financial Statements
have been prepared in accordance with the generally accepted accounting principles.
6. The Financial Statements have been drawn up in conformity with the Bank Companies Act
1991 and in accordance with the accounting rules and regulations issued by the Bangladesh
Bank.
7. Subject to above paragraphs, adequate provisions have been made for advances and other
assets which are, in our opinion, doubtful of recovery.
8. The Financial Statements conform to the prescribed standards set in the accounting
regulations issued by the Bangladesh Bank after consultation with the professional
accounting bodies of Bangladesh.
9. The records and statements submitted by the branches have been properly maintained and
consolidated in the Financial Statements on the basis of the statements certified by the
branch manager and considered by us as correct.
10. The information and explanations required by us have been received and found satisfactory.
11. We have reviewed over 80% of the risk weighted assets of the bank and we have spent
around 3,000 person hours for the audit of books and accounts of the bank.
12. The capital adequacy ratio (CAR), as required by law, has been maintained adequately
during the year.
3.378
3.379
3.380
4.11 REPORTING OF ANYTHING HAVING MATERIAL FINANCIAL IMPACT TO
THE COMMISSION:
3.381 If the Audit Committee has reported to the Board of Directors about anything which has
material impact on the financial condition and results of operation and has discussed with the
Board of Directors and the management that any rectification is necessary and if the Audit
Committee finds that such rectification has been unreasonably ignored, the Audit Committee
should report such finding to the Commission, upon reporting of such matters to the Board of
Directors for three times or completion of a period of 9 (nine) months from the date of first
reporting to the Board of Directors, whichever is earlier.

3.382 The Audit Committee holds meetings at least once every three months to scrutinize
matters as assigned by the Board of Directors. The Audit Committee held 5 (Five) Meetings
in 2014 as per following dates:

3.383
4.12

16th meeting held on 4th April, 2014

17th meeting held on 26th July, 2014
18th meeting held on 2nd August, 2014
19th meeting held on 29th August, 2014
20th meeting held on 1st November, 2014
19th meeting held on 29th August, 2014
20th meeting held on 1st November, 2014
EBLS BALANCE SHEET & SOME VITAL STATISTICS:

3.384 In next two pages, it is going to describe the EBLs Balance sheet comparison of 2013 &
2014. Some corporate governance related graphs and charts are given in next 2 pages.
1. Eastern Bank limited and its subsidiaries. (Balance sheet)
2. Performance during the income year (2008-2013)
3. Key performance indicator (2008 to 2013)

3.385

3.386
3.387
5. FINDINGS:
3.388 Some systematic problems of corporate governance all over the world Eastern Bank
Limited is not different then other company.
5.1 SYSTEMIC PROBLEMS OF CORPORATE GOVERNANCE:
5.1.1 DEMAND FOR INFORMATION:
3.389 A barrier to shareholders using good information is the cost of processing it, especially to
a small shareholder. The traditional answer to this problem is the efficient market hypothesis
(in finance, the efficient market hypothesis (EMH) asserts that financial markets are
efficient), which suggests that the small shareholder will free ride on the judgments of larger
professional investors.
5.1.2 MONITORING COSTS:
3.390 In order to influence the directors, the shareholders must combine with others to form a
significant voting group which can pose a real threat of carrying resolutions or appointing
directors at a general meeting.
5.1.3

SUPPLY OF ACCOUNTING INFORMATION:

3.391 Financial accounts form a crucial link in enabling providers of finance to monitor
directors. Imperfections in the financial reporting process will cause imperfections in the
effectiveness of corporate governance. This should, ideally, be corrected by the working of
the external auditing process.
5.2 TO MAINTAIN SOME PRICIPLES FOR CORPORATE GOVERNANCE:
3.392
5.2.1 RIGHTS & EQUITABLE TREATMENT OF SHARE HOLDER:
3.393 Organizations should respect the rights of shareholders and help shareholders to exercise
those rights. They can help shareholders exercise their rights by effectively communicating

information that is understandable and accessible and encouraging shareholders to participate

in general meetings.
5.2.2

INTEREST OF THE OTHER STAKEHOLDER:

3.394 Organizations should recognize that they have legal and other obligations to all legitimate
stakeholders.
5.2.3

ROLE AND RESPONSIBILITIES OF THE BOARD:

3.395 The board needs a range of skills and understanding to be able to deal with various
business issues and have the ability to review and challenge management performance. It
needs to be of sufficient size and have an appropriate level of commitment to fulfill its
responsibilities and duties. There are issues about the appropriate mix of executive and nonexecutive directors.
5.2.4 INTEGRITY & ETHICAL BEHAVIOR:
3.396 Ethical and responsible decision making is not only important for public relations, but it
is also a necessary element in risk management and avoiding lawsuits. Organizations should
develop a code of conduct for their directors and executives that promotes ethical and
responsible decision making. It is important to understand, though, that reliance by a
company on the integrity and ethics of individuals is bound to eventual failure. Because of
this, many organizations establish Compliance and Ethics Programs to minimize the risk that
the firm steps outside of ethical and legal boundaries.
5.2.5

DISCLOSURE & TRANSPARENCY:

3.397 Organizations should clarify and make publicly known the roles and responsibilities of
board and management to provide shareholders with a level of accountability. They should
also implement procedures to independently verify and safeguard the integrity of the
companys financial reporting. Disclosure of material matters concerning the organization
should be timely and balanced to ensure that all investors have access to clear, factual
information.
3.398 Issues involving corporate governance principles include:

1. Internal controls and the independence of the entitys auditors.

2. Oversight and management of risk.
3. Oversight of the preparation of the entitys financial statements.
4. The resources made available to directors in carrying out their duties.
6. RECOMMENDATIONS:
6.1 MONITORING BY THE BOARD OF DIRECTORS:
3.399 The board of directors, with its legal authority to hire fire and compensate top
management, safeguards invested capital. Regular board meetings allow potential problems
to be identified, discussed and avoided. Whilst non-executive directors are thought to be
more independent, they may not always result in more effective corporate governance and
may not increase performance. Different board structures are optimal for different firms.
Moreover, the ability of the board to monitor the firms executives is a function of its access
to information. Executive directors possess superior knowledge of the decision-making
process and therefore evaluate top management on the basis of the quality of its decisions
that lead to financial performance outcomes, ex ante. It could be argued, therefore, that
executive directors look beyond the financial criteria.
6.2 BALANCE OF POWER:
3.400 The simplest balance of power is very common; require that the President be a different
person from the Treasurer. This application of separation of power is further developed in
companies where separate divisions check and balance each others actions. One group may
propose company-wide administrative changes, another group review and can veto the
changes, and a third group checks that the interests of people outside the three groups are
being met.
6.3 EXTERNAL CORPORATE GOVERNANCE CONTROLS:
3.401 External corporate governance controls encompass the controls external stakeholders
exercise over the organization. Some Examples include
1.
2.
3.
4.
5.
6.

Competition
Debt covenants
Demand for and assessment of performance information
Government regulations
Managerial labor market
Media pressure & Takeovers.

3.402
7. CONCLUSIONS:
3.403 Since the banking service especially the private Banks are doing good business, so it is
clear that the modern people are more concerned about the securing their valuable assets and
get high quality and timely services. For this reason lot of new commercial banks has been
established in last few years and these banks have made this banking sector very competitive,
so now banks have to organize their operation and do their operations according to the need
of the market. Banking sectors no more depends on the traditional method of banking.
3.404 The study was conducted on the proceeding of the activities carried out by Eastern Bank
Limited (EBL) corporate governance. Therefore few limitations occurred while conducting
the study. In spite of having many challenges, adverse economic conditions and market
pattern during the years, the bank tried to maintain its growth trend through the indicators
like strong management efficiency, proper corporate governance and their timely services to
their clients.
3.405 On the basis convincing reasons, Eastern Bank Limited (EBL) management believes that
in the coming years the bank will try it s level best to sustain good corporate governance and
maintain rest of the years. With the current performance of the bank and they will certainly
make Eastern Bank Limited (EBL) one of the best private bank in Bangladesh.

3.406

8. REFERENCES:
1. Eastern Bank Limited, Bangladesh. report on 2014, 2013, 2012.
2. Asian Development Bank, ADB 2013, Corporate Governance and Finance in East Asia, A
Study of Indonesia, Republic of Korea, Malaysia, Philippines and Thailand, A Consolidated
Report, Asian Development Bank, Manila, Philippines, Volume 1, p.5.
3. Andres, PD & Vallelado, E 2014, Corporate governance in banking: The role of the board of
directors, Journal of Banking & Finance, 32 (2008) 25702580, Department of Financial
Economics and Accounting, University of Valladolid, Avenida Valle Esgueva 6, 47011

Valladolid,

Spain.

The

online

version

is

available

at

http://www.ppge.ufrgs.br/giacomo/arquivos/gov-corp/andres-vallelado-2008.pdf. (Accessed
on 7January 2015).
4. Basel Committee on Banking Supervision, February 2006, Enhancing Corporate Governance
for Banking Organizations, section II, Bank for International Settlements, CH-4002
5. Basel, Switzerland. The online version is available at http://www.bis.org/publ/bcbs122.pdf.
(Accessed on 5 January 2015). Basel Committee on Banking Supervision, September 1997,
Core Principles for Effective Banking Supervision, section II. Bank for International
Settlement,

Basel,

Switzerland.

The

online

version

is

available

at

http://www.bis.org/publ/bcbs30a.pdf. (Accessed on 5 January 2015).

6. Bushman, RM & Smith, AJ 2014, Transparency, Financial Accounting Information, and
Corporate Governance, FRBNY Economic Policy Review, Vol. 9, No. 1, pp. 65-87.
7. Claessens, Stijn. 2014, Corporate Governance and Development. Global Corporate
Governance Forum. Focus 1, The International Bank for Reconstruction and Development/
The World Bank,1818 H Street NW, Washington, DC 20433.