Independence of Independent Directors : Evidence from the Banking Sector of Bangladesh

This paper has tried to assess the level of independence of the independent directors in the Banking sector of Bangladesh. The study was based on the factor analysis of 13 factors derived from the annual reports of all the 30 listed Banks of Bangladesh & the informal interviews with the independent directors. It was found that the independence of the independent directors is impaired due to the insufficient number of independent directors in the board, less gender diversity, questionable education level, lack of professionalism, more affiliations with different entities, long associations with the same entity, family/blood relationship, classified directorship, familiarity-based recruitment, unremunerated ornamental post, lack of social status and non-functional participation in the board meeting. The provision of independent directors is not culturally suited to the family-dominated business context of Bangladesh. To accelerate the contribution from independent directors, their appointment should be centralized by the controlling authority, their number should be increased, and they should be adequately remunerated