Bangladesh Bank has finally removed NRB Commercial Bank's Managing Director Dewan Mujibur Rahman over his alleged involvement in a number of loan scandals involving around Tk 700 crore.
He has also been barred from working in any bank or financial institution for two years, according to a notice issued by the central bank yesterday.
Mujibur's firing is the third such action by the BB against bank MDs in the last three and a half years.
Earlier, the banking regulator removed BASIC Bank MD Kazi Faqurul Islam and Agrani Bank CEO Syed Abdul Hamid, after a BB investigation found both of them involved in corruption.
NRB Commercial Bank is the second new generation lender, after the Farmers Bank, to have faced action for irregularities and loan mismanagement.
Only on November 27, Farmers Bank Chairman Muhiuddin Khan Alamgir and the bank's audit committee chair Mahabubul Haque Chisty resigned after the BB asked them to step down over their alleged involvement in financial scams.
Contacted, economists and experts welcomed the BB's latest action, but said it was not enough to restore corporate governance in the bank. They also said the BB should have acted sooner to bring back depositors' confidence in the NRB Commercial bank.
In November last year, the central bank found that Mujibur was involved in disbursing loans worth over Tk 700 crore violating credit norms.
According to its findings, former Mercantile Bank chairman Shahidul Ahsan had drawn benefits from nearly Tk 44-crore shares held by two sponsor directors in the bank, breaching the Banking Company Law.
“Shahidul Ahsan is the actual beneficiary of the shares held by two NRBC Bank directors -- Kamrun Nahar Sakhi and ABM Abdul Mannan -- and those shares are forfeitable,” said the BB report.
Shahidul was present in an annual general meeting of the NRBC Bank as proxy for Kamrun Nahar Sakhi, who lives in Canada. He also attended several meetings of the bank's board and the executive committee, violating rules.
Mujibur is responsible for all of these because, as the MD, he did not take any effective step to stop Shahidul from participating in the board meeting.
As allegations of irregularities at the bank began to surface in 2015, AKM Shafiqul Islam and Syed Golam Farouque -- both directors of Ahsan Group owned by Shahidul -- were appointed alternative directors for Sakhi and Mannan.
But Farouque had attended four meetings of the bank board even before his appointment, the BB found.
In one instance, the bank board approved a Tk 140-crore loan for AG Agro, a concern of Ahsan Group, on May 8, 2013, four days after Shahidul submitted an application for the loan.
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 not only ignored the advice, but also raised the loan amount to TK 183 crore in May last year, putting the bank at risk, the BB report stated.
Besides, the bank's head office approved loans worth Tk 19 crore against Begumganj Feed Mills, an associate company of Ahsan Group, without any loan application from the client and proposal from the branch concerned. Later, the client submitted a backdated application to the bank.
At a meeting on May 11 last year, the bank board raised the loan amount to Tk 118 crore without verifying the company's capacity to pay back.
NRBC Bank's default loans stood at Tk 194 crore at the end of the third quarter of this year, up from Tk 128 crore a year earlier, due to massive irregularities in loan disbursement.
Finding such gross irregularities in the bank established in 2013, the BB issued separate letters to the bank's Chairman Farasath Ali and Mujibur on March 20, asking them to explain why they would not face action for their wrongdoings and their failure to protect depositors' interest.
Later, a BB standing committee started interrogating Mujibur in a personal hearing at the BB headquarters on October 16.
As he failed to satisfy the BB officials, the central bank at last removed him from the post as per article 46 of the Banking Company Act, concluding the process yesterday.
However, the BB has yet to take any action against its chairman.
'TOO LATE, NOT ENOUGH'
Contacted, former BB governor Salehuddin Ahmed said the central bank should take punitive action also against the board members as they too were involved in the malpractice.
Exemplary punishment against the board and the management will help prevent such scams in future, he added.
The BB waits too long to take action. This is unhelpful, as the scamsters get more time to perpetrate more corruption, he noted.
“Mujibur has been removed almost one and a half months after arranging the hearing by the central bank. The BB will have to take such action promptly and timely,” he said.
AB Mirza Azizul Islam, former adviser to a caretaker government, said the BB should consider taking legal action against the scamsters.
The BB should send its reports to the Anti-Corruption Commission for actions against those involved in the loan scandal.
Also, the board members who were part of the scam should be removed, he added.