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Bangladesh Bank has introduced a comprehensive new guideline imposing stricter controls on the establishment of bank branches, sub-branches and other banking outlets, warning that any business centre opened without prior approval will be treated as a violation of the law and may trigger punitive action against the concerned bank.
The central bank issued the circular on Sunday through its Banking Regulation and Policy Department, replacing the 2023 directive with the new “Guidelines on Establishment, Relocation, Rental/Lease and Renewal of Agreements for Banking Business Centres, 2026.” The guideline takes immediate effect and is mandatory for all scheduled banks.
According to Bangladesh Bank, the new framework aims to strengthen governance in the expansion of banking networks, curb unnecessary expenditure, ensure a level playing field among banks and promote a balanced distribution of banking services between urban and rural areas.
The guideline brings all types of banking business centres under a single regulatory framework. These include head offices, branches, sub-branches, SME and agricultural branches, automated teller machines (ATMs), cash deposit machines (CDMs), collection booths, foreign exchange booths, business hubs, sales centres and service centres.
Under the new rules, banks must first submit an annual expansion plan and obtain policy approval from Bangladesh Bank before establishing any new branch. After selecting a specific location, they will be required to secure final approval from the central bank.
The guideline also reinforces the requirement for balanced branch expansion by making it mandatory for banks to maintain the prescribed urban-rural ratio. A bank seeking to open a new branch in an urban area must simultaneously meet the requirement for opening branches in rural locations.
Bangladesh Bank has also tightened regulations governing sub-branches. Under the new policy, every sub-branch must operate under the supervision of a nearby full-fledged branch, while banks will not be allowed to establish multiple sub-branches within a specified distance of one another.
The central bank said sub-branches should function as low-cost banking outlets with limited manpower to improve operational efficiency while expanding financial services.
The guideline further sets out stricter standards for the establishment or expansion of bank head offices. Banks have been instructed to avoid acquiring excessive office space or incurring unnecessary expenditure. Decisions on office space must be based on staffing requirements, operational needs, future expansion plans and financial capacity.
In addition, Bangladesh Bank has encouraged banks to use locally produced and environmentally friendly materials in office construction and interior decoration.
The central bank warned that any branch, sub-branch or other banking business centre established without obtaining the required approvals would be considered a breach of the regulations. Such violations could result in regulatory action against the concerned bank.
Issued under the powers of the Bank Company Act, 1991 (as amended), the guideline is effective immediately. From now on, all activities related to the establishment, relocation, lease or rental, and renewal of agreements for banking business centres must comply with the new regulatory framework.