Peoples Bank hits a snag | The Daily Star
12:00 AM, March 06, 2019 / LAST MODIFIED: 12:03 AM, March 06, 2019

Peoples Bank hits a snag

Licensing stuck over money laundering allegation; Bengal, Citizen banks get nod

The central bank has stalled the process to provide licence to the proposed Peoples Bank following allegation of money laundering against its Chairman Abul Kashem.

But Kashem has vowed to bounce back, saying that he will manage the Bangladesh Bank's licence within the shortest possible time.

As per a decision taken on February 17, the central bank yesterday gave the approval to two other proposed banks – Bengal Commercial and Citizen – and asked them to prepare to roll out banking services as per their boards' decision.

“We have recently received a money laundering allegation against the chairman of the proposed Peoples Bank. We will take decision on the bank after settling the complaint,” said a senior official of the Bangladesh Bank (BB).

The BB has forwarded the complaint to the Bangladesh Financial Intelligence Unit to scrutinise the issue in details, he said.

Peoples Bank will be provided with the licence if its chairman can prove that he had no link with the money laundering case, he said.

Md Serajul Islam, spokesperson and executive director of the central bank, also confirmed the latest development, saying the central bank has suspended the process to provide a letter of intent to Peoples Bank because of the allegation.

The central bank will take its next course of action based on the findings of the investigation, he said.

Contacted, Kashem, also an Awami League leader in the United States, said he did not know anything about the money laundering allegation.

The sponsors of the proposed three banks must purchase the shares as per their assets shown in their respective income returns. The central bank earlier raised question how Kashem would transfer his assets from the US to Bangladesh to buy shares of the bank amounting to Tk 40 crore.

Kashem has net assets worth Tk 43.94 crore in the US and Tk 56.92 lakh in Bangladesh, according to the documents provided by him to the central bank as part of the process to buy the stake.

He will have to sell off about 90 percent of his assets to purchase the shares.

In October last year, the central bank requested the foreign affairs ministry to get details of Kashem's net assets in the US and also to enquire whether there remains any impediment to bringing the amount from the US.

The ministry, however, gave positive feedback about Kashem to the BB which helped him get initial approval from the central bank.

According to the central bank's letter of intent, Bengal and Citizen banks will have to fulfil a set of conditions within the next six months.

The proposed banks will have to manage a paid-up capital worth Tk 400 crore and secure licence from the Registrar of Joint Stock Companies and Firms to form company. They will have to increase the capital to Tk 500 crore within the next two years after taking the final approval from the central bank.

The Bengal Group of Industries is the sponsor of Bengal Commercial Bank.

AL Lawmaker Morshed Alam is the chairman of the group and his younger brother Jashim Uddin is the chairman of the proposed bank, while Jahanara Huq, mother of Law Minister Anisul Huq, is the chairman of Citizen Bank.

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