Breach of Company Act

Willful appointments hit banking sector

Staff Correspondent

12th July, 2015 11:51:57 printer

Willful appointments hit banking sector

Management pundits believe the banking and financial sector of the country will plunge into a deep crisis if managing directors are appointed to the state-run banks without permission of the regulator, Bangladesh Bank.


Violations of the Banking Company Act have come to the fore after irregularities in appointing managing director to state-owned Agrani Bank, discounting the central bank, surfaced.


Recently, finance ministry appointed Syed Abdul Hamid as the MD of Agrani Bank for the next consecutive term without the knowledge of the BB.


A BB investigation scanned Hamid’s involvement in giving loans to some signboard companies and so-called businessmen covertly.


The ministry concerned looked apparently unmoved by the report.


Section 15 (4) of the Act says a banking company, except new and special banks, must seek BB’s permission to appoint a managing director. But the above law was not followed in appointing Hamid for the next term.


In the recent past, two other state-run banks—Sonali and Rupali—got their new MDs. That time, finance ministry took permission as it knew the candidates were politically affiliated and the central bank would not oppose them.


But the case of Agrani Bank was an exception and Hamid had no political backing. As the ministry was predetermined to appoint him, it refrained from taking BB’s permission.


In an utter surprise, the ministry is yet to reply to a letter sent by the BB last week, seeking clarification of the appointment.


Dr Salehuddin Ahmed, former BB governor, said the central bank is the regulatory body of all banks and financial organisations. Appointment of a managing director to a bank without BB’s permission is unexpected.


The government enacts law and it should not tolerate breach of law. If banking laws are violated, financial sector will suffer, he advocated.


Replying to a query, a deputy governor of BB, who wished not to be quoted, said as the language of law is not clear about reappointment of a managing director, finance ministry took advantage of the legal loopholes.


It was learnt that Hamid allocated loans to the tune of Tk 1,000 crore to some signboard companies and controversial businessmen through irregularities. One of the loan recipients is Moon Group.


Mizanur Rahman Mizan, owner of the company, took around Tk 300 crore from the bank. The officials of the bank released the loan money to the company at the Hamid’s behest.


He allegedly maintains contact with the policymakers of the government. He does not care for the law. He ignored an order for taking action against nine officials including former manager of the principal branch for their involvement in the loan irregularities.


An inspection of BB team identified the irregularities. The matter was traced by internal audit officials of the bank.


The audit committee of the board, led by Arastoo Khan, conducted the enquiry while engineer Abdus Sabur, advocate Balaram Podder and Altaf Hossain Molla were the committee members.


The investigators found evidence that Moon Group took the loan submitting false statement of constructing high-rise buildings in Kalyanpur and Dilkusha in the capital and Barguna.


The company is constructing a 20-storey building on 52 decimals of land near Kalyanpur bus stand. It allegedly grabbed the land.


Another 20-storey building named ‘Razia Tower’ has been constructed on an occupied land in the same mouja. The tower is named after Mizan’s wife.


To this end, the central bank ordered action against nine officials, including former principal branch manager and now Agrani Bank deputy managing director Mizanur Rahman Khan. But Hamid did not go by the BB’s directive.


On appointment of Agrani Bank managing director, BB executive director Md Mahfuzur Rahman said the central bank has sent a letter to finance ministry seeking its clarification but the ministry is yet to respond.