Bangladesh Bank yesterday reconstituted the board of National Bank, in a move that is expected to steady the ship at the country's first private sector bank beset by financial irregularities.

The step was taken in the interest of the depositors and the bank and to ensure good governance following a recommendation from the Bangladesh Securities and Exchange Commission, the BB said in the order to dissolve the previous board of the National Bank.

The board disrupted good governance and banking discipline, which went against the interests of the bank and the depositors, the order said.

The previous board violated rules while approving loans, made undue interference in the day-to-day running of the bank, abused their positions to cannibalise the shareholding of the bank to one family, indulged in financial irregularities and created complexities in electing or re-electing directors.

Besides, the bank's financial health deteriorated due to the weakness of the board in policymaking, the BB order added.

Syed Ferhat Anwar, a former professor at the University of Dhaka's Institute of Business Administration, is the new chairman of National Bank, replacing Monowara Sikder. He was appointed the chairman on the condition that he resign as the independent director of Meghna Bank, a post he held since October 2020.

Moazzem Hossain, who is the chairman of Hosaf Group and one of the founders of National Bank, has been reinstated on the board. At the bank's 39th annual general meeting, Hossain and his son Mabroor were ousted from the board.

Md Serajul Islam, a former BB spokesman, and M Kamal Hossain, a former managing director of Southeast Bank, have been added to the board.

KDS Group Chairman Khalilur Rahman, Awami League MP Parveen Haque Sikder and Md. Shafiqur Rahman stay on as directors.

Parveen's brothers Ron Haque Sikder and Rick Haque Sikder were removed from the board along with Zakaria Taher, Murshid Kuli Khan and the AL's Panchagarh-1 candidate Md. Naimuzzaman Bhuiyan Mukta.

The central bank's move to restructure the board came after Parveen wrote to the BSEC on December 17 to convey her apprehension that she may be ousted from the board through manipulation of the digital voting system by some of the board members.

She cited the case of Moazzem and Mabroor, who were voted out of the board similarly. 

Before the voting day, some directors forcefully collected the beneficiary owner's account numbers of the general shareholders and prepared a manipulated election system so that they could exclude Moazzem and Mabroor, she said in the letter.

Then on December 20, the bank informed the Dhaka Stock Exchange that the chamber judge of the Supreme Court's Appellate Division issued a status quo order on the holding of the bank's AGM until January 21 next year, responding to an appeal against an order issued by the High Court.

Earlier, the High Court stayed the AGM following an application by a director of the bank. Later, the bank moved to the Appellate Division against the HC order.

In the first months of the year, the bank's losses almost quadrupled to Tk 1,124 crore from a year earlier, while its defaulted loans during the period amounted to Tk 13,514.6 crore.

Its stock price has been languishing at the floor price of Tk 8.3 since July 28 last year.