BB wants 'resigned' Commerce Bank MD back, chairman removed
BB also recommends removing executive committee chairman
Highlights
- Three private bank MDs resigned within 10 days
- Bangladesh Bank probe found excessive board interference
- BCB chairman and EC chairman pressured MD Mosharraf Hossain
- Key dispute: Tk48 crore loan interest waiver to Suruj Mia Spinning Mill
- BB recommended removing board leaders, reinstating MD
In a span of 10 days between late July and early August, managing directors (MDs) of three private banks resigned, including the Bangladesh Commerce Bank MD, Mosharraf Hossain.
A day before his resignation on 30 July, the bank's Chairman, Ataur Rahman, called Mosharraf and said, "Resign and leave office today," a Bangladesh Bank investigation has found. The MD replied, "It's late now, sir. Writing the resignation today is a bit difficult, but I will submit it tomorrow."
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His resignation triggered a stir in the banking sector. In response, the Bangladesh Bank conducted a special investigation, which revealed a troubling picture.
Bangladesh Commerce Bank, long entangled in irregularities, has been unable to return depositors' funds. Last September, following the government change, the Bangladesh Bank restructured the bank's board.
Former central bank executive director Ataur Rahman was appointed chairman, and Mohsin Mia, former deputy MD of Social Islami Bank, became executive committee chairman.
A five-member board was formed, including Sheikh Ashrafuzzaman FCA as audit committee chairman, while two existing members remained.
The central bank investigation found that the new board has interfered excessively in daily operations, particularly in loans, appointments, transfers, and disciplinary matters. They frequently summoned officers to their offices to issue irregular instructions and used abusive language if directives were not followed.
The chairman and executive committee chairman worked in the office almost daily, issuing direct instructions to staff. Objections to this interference are said to be one of the reasons behind the MD's resignation.
According to bank sources, Mosharraf Hossain joined as MD on 16 January this year and resigned on 30 July, serving a total of 126 working days. During this period, the chairman was in office for 113 days and the executive chairman for 108 days.
Another reason behind the resignation was the MD's objection to a Tk48 crore interest waiver on a loan to Suruj Mia Spinning Mill, where executive committee chairman Mohsin Mia had previously served as an adviser.
The bank's company secretary told the BB team that the board pressured the MD on various issues and, at times, pushed him to dismiss certain officers and appoint board-nominated individuals.
BB recommendations
Bangladesh Bank's investigation concluded that the chairman and executive committee chairman directly interfered in the bank's daily management, and recommended that they be removed from board operations.
The report suggested appointing a temporary chairman under Section 46(2) of the Bank Companies Act, 1991.
It also recommended nominating a suitable Bangladesh Bank official to monitor the bank's operations.
Importantly, the MD's resignation should not be accepted, and he should be instructed to resume office immediately.
What the chairman told BB
In a written statement to the BB investigation team, Chairman Ataur Rahman said that on 29 July, during a discussion on the bank's deposits, loans, and classified loan ratios, the MD voluntarily decided to resign, taking responsibility for his own failures, and left the boardroom. The following day, he formally submitted his resignation.
The chairman asserted that the board never pressured the MD. Rather, he resigned due to his failure in managing the bank, inefficiency in decision-making, and providing incorrect information regarding the loan interest waiver to Suruj Mia Spinning Mill.
MD's objection to loan interest waiver
During the board meeting on 29 July, the MD objected to waiving Tk48 crore in interest on a Tk88 crore defaulted loan of Suruj Mia Spinning Mill. This angered the chairman.
The investigation team's audio verification revealed that the MD opposed the chairman's direct communication with customers and officers, as well as interference in daily operations with regional heads. The MD also expressed reluctance regarding new appointments.
At the same meeting, a director, Golam Mortuza, suggested that a direct resignation might trigger a complaint to the governor, so a formal complaint should be lodged.
However, the finance ministry representative on the board, Kamrul Haque Maruf, proposed giving MD Mosharraf one to two months' time. But Chairman Ataur Rahman instructed the MD to resign immediately.
What ousted MD Mosharraf told TBS
Resigned MD Mosharraf Hossain told TBS, "Bangladesh Bank is investigating the matter. I was pressured on various issues, and the board asked me to resign, so I did. As MD, I had the right to speak, but the chairman did not want that. I have been summoned by the Bangladesh Bank next Sunday and will act according to their instructions."
When contacted by phone, Chairman Ataur Rahman declined to comment on the matter.
