A cesspool of banking irregularities
For a bank that's only 11 years old, the board of NRB Commercial (NRBC) Bank has built itself an impressive rap sheet of irregularities. A recent investigation by this newspaper reveals how some of the bank's directors, including the incumbent chairman, have flouted regulations, committed loan scams and money laundering, and even pilfered the provident funds of their own employees. The investigation, conducted over six months, is based on hundreds of pages of documents including board meeting minutes, internal enquiry reports, bank statements and court documents.
According to the documents, in 2015, the NRBC board launched an investigation into money laundering allegations against five directors and a sponsor shareholder, who allegedly formed an alliance and took out benami or disguised loans from the bank in the name of companies they had affiliations with. They did so without disclosing said affiliations, violating Bangladesh Bank rules. Unhappy with the investigation, two of the accused directors, Tamal Parvez and Adnan Imam, attended a board meeting in December 2015 toting a gun, in an apparent attempt to "establish supremacy over the board to take and hide disguised/benami loans, disguised/benami contracts and other misdeeds," says the meeting minutes.
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Following the investigation, Tamal, Adnan and another accused director were removed from the board. But using legal loopholes, they made their way back in, and in December 2017, Tamal was elected chairman unanimously—a position he holds to this day. The other two were also appointed to important roles in the board. The accused have, of course, denied all these allegations, while the findings of the board's investigation have been swept under the rug. The question is, how did they get away with such blatant irregularities? Bangladesh Bank says it has taken actions as required. If that is the case, why has Chairman Tamal Parvez's tenure been rife with more allegations of irregularities?
Sadly, what's happening at the NRBC Bank is but a symptom of an ailing banking system plagued by lack of governance, impunity afforded to financial criminals, and a disregard for transparency and accountability. This has led to multiple crises across the sector before, including the prevalence of non-performing loans (NPLs), lack of efficiency, and an erosion of public trust. No wonder Bangladeshi banks were recently found to be the least profitable in South Asia. To save the sector and resolve these long-standing issues, there is no alternative to stern actions. To this end, the central bank must be empowered enough so it can regulate the sector properly and also introduce the reforms it badly needs.
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