Two SB directors stay away from Board activities

Two Sonali Bank directors have refrained from attending its Board meetings and other activities because, as indications suggest, they have doubts about the management's seriousness to professionally run the institution as a viable concern.

According to sources, the directors - Dr Atiur Rahman and Khusi Kabir - have already verbally informed the Finance Ministry and the chairman of the bank about their decision not to attend any Board meeting as a mark of their protest. The prime minister's office has also been communicated informally about the precarious situation prevailing at the bank.

Both these directors were chosen from the civil society as part of the Awami League government's move to put non-partisan professionals in the NCB boards. Dr Rahman is an eminent economist while Khusi Kabir is a widely-known and respected social worker of the country.

These two directors played a key role in defending the bank's interest in the case of many a controversial loan proposal. To cite a few examples, they resisted giving fresh loan facilities to a top defaulter, Fazlur Rahman, who already has over Tk 100 crore outstanding loans with different banks, with Tk 69 crore of the total amount being defaulted. These directors also showed their social responsibility when they arrested the release of a loan for importing environmentally-hazardous two-stroke autorickshaws.

Sonali Bank is now facing an uncertain financial situation with the appointment of a new Managing Director, Mohammad Enamul Haq Chowdhury, who commands little confidence of the banking circle.

In fact, the very beginning of salvaging the ailing bank began when Khandaker Ibrahim Khaled was made Sonali's MD and the Board got the confidence that they can make a sharp turnaround in its financial standing.

However, much to the surprise and frustration of many, Khaled was removed from the bank and put at the central bank and Mahbubur Rahman Khan, a central banker having little experience in commercial banking, was put in his place.

People both inside and outside the bank feel that this was the point from where the bank took a decisive turn towards a worsening situation. Loan defaulters and bad project protagonists got a hold on the bank and became successful in pushing through with many ill projects.

As the bank got mired in deep crisis, the Finance Ministry even became alarmed and summoned the Board and sought its salvaging suggestions. The Board urged the finance minister to appoint an honest and competent banker at the helm of the institution.

Acting wisely, the minister appointed the bank's DMD Mohammad Hossain its MD on November 2. This decision was widely supported by the Board and also people outside it.

It may be recalled here that Hossain was promoted to the DMD post on August 16 and at that time Sonali had a loss of Tk 80 crore. From then onwards, Hossain worked hard and devised various methods to reduce the loss of the bank as well as the amount of its classified loans.

As the health of the bank started recovering, it stopped taking loans from the call money market and became a net lender. A Finance Ministry-proposed incentive package was quickly implemented to recover the stuck up loans before any other NCB even showed any interest in the ministry's proposal. The bank approved incentives worth Tk 6 crore for loan recovery and profit-making.

As a result of many such drastic reform measures, Sonali Bank made a turn-about and posted a profit of Tk 58 crore. In three months time, the bank's classified loans came down by Tk 34.37 crore. According to a Sonali Bank internal report, classified loan recovery increased drastically. While only Tk 262.89 crore classified loans were recovered during the first nine months of 1999, the bank recovered Tk 145.11 crore in October and November alone, and bank officials attribute the result to Hossain's initiative.

It was then naturally expected that Hossain would get a term extension as his acumen was badly needed to salvage the ailing bank. However, to everyone's surprise, he was overlooked as the government brought in a new MD, Enamul Haq.

The Daily Star contacted Dr Atiur Rahman who refused to make any comments.