NRB Commercial restructures board
Unsettled NRB Commercial Bank yesterday restructured its board of directors in a move that is expected to help restore corporate governance and depositors' confidence in the bank.
The development comes after the Bangladesh Bank last week advised the four-year-old bank to reform its board out of its own accord, a number of BB officials told The Daily Star yesterday requesting not be named.
Otherwise, the central bank would step in and do the deed, like it did in case of Farmers Bank, another fourth generation bank that got mired in massive financial troubles.
Subsequently, an emergency board meeting was called at the NRBC headquarters in the capital.
Headed by Tamal SM Parvez, the new board sent the managing director, Dewan Mujibur Rahman, on a three-month leave and appoint the deputy managing director, Kazi Md Talha, as the temporary managing director.
Mohammad Shahid Islam has been made the new vice-chairman, replacing Toufique Rahman Chowdhury. Abu Bakr Chowdhury, Rafiqul Islam Mia Arzoo and Adnan Imam have also been made as the new chairmen of executive, audit and risk management committees.
Parvez told the daily yesterday that the restructuring was done with the blessings of all directors, including former chairman Farasath Ali.
"Farasath Ali tried to restore the bank's image but failed. He felt he was partially responsible for the bank's image crisis. So for the best interest of the bank he stepped down from the post."
The directors were previously involved in an internal feud but the latest restructuring has put an end to all infighting, Parvez added.
In November last year, the central bank found 10 counts of wrongdoings by the NRBC's board, including sanctioning loans amounting to more than Tk 700 crore by violating credit norms and allowing outsiders to often attend meetings.
According to the central bank's findings, former Mercantile Bank Chairman Shahidul Ahsan had drawn benefits from nearly Tk 44 crore shares held by two sponsor-directors in NRBC, in a breach of the Bank Company Act.
"Ahsan is the actual beneficiary of the shares held by two NRBC directors -- Kamrun Nahar Sakhi and ABM Abdul Mannan," said the BB report, adding that it means the shares are forfeitable.
For instance, the bank board approved a Tk 140-crore loan for AG Agro, a concern of Ahsan Group, on May 8, 2013 -- just four days after Ahsan had submitted the loan application.
Since the collateral against the loan was only Tk 3.91 crore, the BB advised the bank to bring down the loan amount. But the board instead raised the loan amount to Tk 183 crore in May last year, putting the bank at risk, the BB report stated.
Ahsan was present in an annual general meeting of NRBC as proxy for Sakhi, who lives in Canada. He also attended several meetings of the bank's board and the executive committee.
As allegations of irregularities at the bank began to surface in 2015, Sakhi and Mannan were replaced by AKM Shafiqul Islam and Syed Golam Farouque -- both directors of Ahsan Group, which is owned by Ahsan.
But Farouque had attended four meetings of the bank board even before his appointment, the BB investigation found. Subsequently, the BB on March 20 issued a letter to then-chairman Ali, asking him to explain why the board would not face action for its misdemeanours.
The BB on December 6 also took a decision to remove the bank's managing director over his alleged involvement in a number of loan scandals, only to be thwarted by the High Court the following day. The court also issued a rule asking the BB and the government to explain why the central bank's decision to remove Rahman should not be declared illegal.
The central bank will move to vacate the writ petition filed by Rahman at the earliest, said its deputy governor SK Sur Chowdhury.
Contacted yesterday, Rahman said: "I asked the new board not to take any measure against me breaching the high court decision and the BB circular."
NRBC's default loans stood at Tk 194 crore at the end of the third quarter, up from Tk 128 crore a year earlier.