BB appoints observer to Mercantile Bank

Bangladesh Bank yesterday appointed an observer to Mercantile Bank to address the deteriorating corporate governance at the bank.

Masud Biswas, a general manager of the central bank, will attend all executive and audit committee meetings, the BB said in a letter to Mercantile Bank. The meetings' agenda must be sent to the observer at least three days in advance. 

The move comes after central bank inspections found irregularities at the bank, especially in corporate governance.

For instance, a central bank inspection team found at least seven outsiders at a board meeting of Mercantile Bank on February 2, a gross violation of the Banking Companies Act. 

The BB immediately sent a warning letter to the bank authorities.

While the private commercial banks are said to be in good financial health overall, gross irregularities were found in some of them, a central bank official said. Last month, the BB appointed an observer to National Bank on various counts of financial irregularities.

The central bank is now considering taking stern action against the errant banks including removal of managing directors and disbanding of the board, he added.

The BB has also appointed observers to five other banks, including the state-run BASIC Bank, Bangladesh Commerce Bank, ICB Islamic Bank and Islami Bank.