The Bangladesh Bank has asked six banks to send their managing directors on a three-month leave before the banks’ forensic audits to be conducted by an international audit firm.
This decision was made at an emergency meeting on January 2 with the banks’ chairpersons and senior officials, with the central bank governor, Ahsan H Mansur, presiding over the meeting.
The six banks are First Security Islami Bank, Social Islami Bank, Global Islami Bank, Union Bank, Exim Bank and ICB Islamic Bank.
According to Bangladesh Bank officials, the forensic audits will assess the financial health of these banks and determine their future.
Based on the findings, decisions will be made on whether any bank should be liquidated, merged or allowed to operate independently.
Of these banks, all but ICB Islamic Bank and Exim Bank were previously controlled by controversial S Alam Group.
During the Awami League regime that was ousted on August 5, 2024 amid a mass uprising, the S Alam Group allegedly had taken away nearly Tk 2 lakh crore from the banks it controlled, including Tk 75,000 crore from Islami Bank, leveraging its political influences.
Following the political change on August 5, the interim government restructured the boards of these banks, removing the influences of S Alam Group on the entities.
Despite the restructuring and audits, the process of restoring transparency and stability in these banks remains challenging as many officials allegedly involved in the past malpractices still hold positions of authority, complicating efforts to ensure accountability and reforms, BB officials said.
Bangladesh Bank spokesperson and executive director Husne Ara Shikha stated that the central bank would soon conduct forensic audits through an international audit firm to assess the asset quality of the six banks.
She said that the boards of directors of six banks decided to place their managing directors on temporary leave to ensure they do not interfere in the audit process.
‘This measure is intended to maintain transparency throughout the process,’ she said.
Husne Ara said that if MDs are found involved in any irregularities, the central bank would take actions against them, otherwise they would be reinstated.
‘This decision aligns with international best practices,’ she added.
In the past month, the Bangladesh Bank issued a special circular mandating risk-based integrated audit programmes for banks.
Qualified international consultancy firms will oversee the audits to evaluate the asset quality of these six banks.
During the ousted Awami League government, huge amounts of public funds were reportedly withdrawn from the banking sector and laundered abroad.
These funds are yet to be recovered, leading to a sharp increase in non-performing loans and undermining depositor confidence.
The interim government has freed these banks from S Alam’s influences and initiated internal audits to uncover the true extent of financial damage.
ICB Islamic Bank has long been in financial distress, failing to repay depositors for years, though the central bank had kept it operational.
Exim Bank, under the long-standing leadership of its former chairman Nazrul Islam Mazumder, reportedly had allowed large-scale fund withdrawals by business conglomerates like S Alam Group and Beximco Group.
These actions, allegedly driven by political influences, drained the bank’s financial stability.
Beximco Group is owned by Salman F Rahman, an adviser to the deposed prime minister, Sheikh Hasina.
Salman is currently in jail in a case on murder charges.