Business Engagements

Bangladesh Bank asks bank directors, top 3 execs to report by Feb

HM Murtuza | Published: 22:49, Jan 22,2021

 
 

A file photo shows the Bangladesh Bank headquarters at Motijheel in the capital. The Bangladesh Bank has asked all the banks’ directors, managing directors and two other officials immediately in rank next to the MDs to submit reports on their business engagements to their respective boards by February this year. — New Age photo

The Bangladesh Bank has asked all the banks’ directors, managing directors and two other officials immediately in rank next to the MDs to submit reports on their business engagements to their respective boards by February this year.

The top three bank executives along with all the directors were also asked to submit reports on the business engagements of their family members to the board.

The central bank came up with the circular on Thursday amid the huge plundering of depositors’ money by People’s Leasing and Financial Services managing director and former NRB Global Bank managing director PK Halder and some directors of different banks and financial institutions.

PK Halder laundered over Tk 10,000 crore from the financial sector through issuance of credit to different companies owned or controlled by him, his family members and friends.

As a consequence of the money laundered by PK, People’s Leasing and Financial Services has come under liquidation after the entity failed to repay the depositors’ money.

International Leasing and Financial Services has also failed to clear the depositors’ money due to PK’s embezzlement.

The BB circular said that the directors, MDs and two other immediate subordinate officials of the MDs will have to submit their trading, financial, agriculture, industrial and other business-related information along with details of the business entities their families are associations with to their respective boards.

The details of the business entities must include the name of the business entity, its address and other relevant details.

After the end of a particular year, the officials and directors of the banks will have to submit the information by January 20 of the immediate next year.

For the year 2021, the bank officials and directors have been allowed to submit the documents and information by February 28.

After the submission of the information, the banks were asked to place the documents before their respective boards and preserve them properly.

Even though submission of the information on yearly basis is mandatory for the banks’ officials and directors under Section 18(2) of the Bank Company Act 1991, there is no given deadline for submission of the documents.

Economists and civil society members have been calling out for enforcement of rules vital for bringing discipline to the country’s financial sector.

As per a report placed in parliament in January 2020, outstanding loans of directors of banks from the banks rose to around Tk 1.75 lakh crore, representing around one-sixth of all outstanding loans in the banks at that time.

The sorry state of Farmers Bank, now known as Padma Bank, is a testament of the involvement of top bank executives and directors in irregularities and plundering of money from the banking system in guise of shady companies they are associated with.

Following bank’s irregularities surfaced and it failed to repay the depositors’ money, the central bank removed the then Farmers Bank managing director and chief executive director AKM Shamim over continuous disbursement of loans despite a liquidity crisis in December 2016, in just three years of the bank’s inception.

After the bank’s financial irregularities became public, the bank’s chairman, Muhiuddin Khan Alamgir, and audit committee chairman Md Mahabubul Haque Chisty also stepped down from the board over their alleged involvement in financial scams at the central bank’s instruction.

In October 2020, the Anti-Corruption Commission lodged a case against Chisty, Chisty’s son Rashedul Haque Chisty, MRS Laila Vanaspati Products managing director Shahabuddin Alam and its chairman Yasmin Alam, Farmers Bank managing director AKM Shameem and its former additional managing director AKM Shamim over the same allegations.

In December 2019, AB Bank filed a lawsuit with the joint district judge in Dhaka against 15 individuals, including its former chairman and managing directors, in connection with the laundering of $20 million from the bank in 2014.

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