The central bank has for the first time set the minimum age, default loan recovery targets and other criteria for aspirant chief executive officers of banks and those looking to be reappointed in the top job as part of its efforts to restore good governance and reduce bad debts.

It comes more than two weeks after the Bangladesh Bank (BB) fixed the age, education and other criteria for directors of banks.

The minimum age for the managing director or CEO has been set at 45 years and the maximum age at 65, according to the guidelines yesterday.

For the appointment or re-appointment of CEOs, banks should include the specific targets to recover the defaulted loans and write-off loans and monitor the progress from time to time.

"A competent, professional and experienced managing director is important to ensure good governance in the banking sector," the new guidelines said.

A senior central bank official, who was involved in formulating the guidelines, told The Daily Star that the inclusion of the targets would help bring down the bad loans in the banking sector.

In Bangladesh, the banking sector is going through one of its toughest times as people's trust in them has taken a beating owing to massive irregularities at some lenders, directors' undue intervention, and rising bad loans.

On February 4, the banking regulator unveiled a roadmap to bring down default loans below 8 percent by June 2026 from 9 percent in 2023 and ensure corporate governance.

The BB has taken 17 initiatives to implement the roadmap.

"Currently, the management of banks face more challenges than in the past in tackling business and technological risks," the BB said.

The central bank will approve the appointment or re-appointment of the CEOs nominated by banks based on the positive recommendations of a committee led by a deputy governor, the guidelines said.

The nominated person must not have any business interest in the bank and can't be involved with any association or institution of any director of the lender.

He or she will have to have at least 20 years of banking experience and at least two years of experience of working in the immediate position below the CEO.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, welcomed the central bank initiative.

"The criteria will help bring good governance to the sector."