Cenbank dissolves Meghna, NRBC, NRB bank boards for going against depositors' interests

Infographics: TBS

The Bangladesh Bank has dissolved the boards of three private commercial banks to safeguard depositors' interests and restore discipline in their operations.

The decision, announced today (12 March), affects Meghna Bank, NRBC Bank, and NRB Bank – all fourth-generation lenders that began operations in 2013.

The central bank also appointed new boards of directors to oversee the three institutions. Bangladesh Bank spokesperson and Executive Director Arif Hossain Khan confirmed the matter to reporters today, saying that further details would be disclosed tomorrow (13 March).

Some of the sponsor directors behind these banks have been linked to the previous Awami League government led by Sheikh Hasina.

In a letter signed by Governor Mansur and sent to the managing directors of these three banks, it was stated that due to policy weaknesses in the boards, the financial condition of the banks had deteriorated, disrupting banking governance and discipline.

The boards were also found to be involved in activities that went against the interests of the banks, depositors, and the Bank Company Act.

Citing powers under Sections 47(1) and 48(1) of the Act, the Bangladesh Bank ordered the dissolution of the existing boards to protect depositors' interests and uphold public interest. At the same time, new boards have been formed for the banks, according to the letter.

The move comes amid growing concerns over governance and regulatory compliance in parts of the banking sector. The Bangladesh Bank has intensified its oversight efforts to ensure financial stability.

Since the interim government took office in August last year and Ahsan H Mansur was appointed governor, the central bank has so far dissolved the boards of 14 banks.

Complaints of politically motivated move

An ousted chairman of one of the three dissolved bank boards told TBS that the financial health of these banks was not critically weak. The central bank had previously identified weak banks, yet these institutions were not included in that list. 

Requesting anonymity, he claimed that the dissolutions were politically motivated, driven by allegations of ties to the former Awami League government. 

Expressing concern, he warned that the restructuring could lead to increased withdrawal pressure from depositors.

The former chairman also revealed that he and the other ousted chairmen of the three banks are currently abroad. 

The central bank regulations require board members to be physically present at least twice a year for meetings. Since the fiscal year is not yet over, he argued that their absence had not violated any regulatory requirements.

Meghna Bank's board reshuffled amid legal controversy

Before its board was dissolved, the Meghna Bank was chaired by HN Ashikur Rahman, the Awami League's central treasurer and a former MP. 

In March this year, a murder case was filed against him and 224 other Awami League leaders in connection with a political killing in Mithapukur, which occurred on the day Jamaat-e-Islami leader Delwar Hossain Sayeedi's death sentence was announced.

The new board of Meghna Bank includes sponsor shareholder Uzma Chowdhury, representative director Tanvir Ahmed from Cassiopeia Fashion Ltd, and independent directors such as former Bangladesh Bank executive directors Md Mamunul Haque and Md Rojob Ali. 

Also appointed were former Jamuna Bank managing director Md Nazrul Islam, former Prime Bank additional managing director Habibur Rahman, and FCA chartered accountant Md Ali Akhtar Rizvi.

NRBC Bank's ex-chairman faces financial crime allegations

Parvez Tamal, the chairman of the dissolved NRBC Bank board, had his accounts frozen in November following an order from the Bangladesh Financial Intelligence Unit (BFIU). The freeze also targeted two bank officials – Mohammed Adnan Imam, former chairman of the bank's executive committee, and Md Jafar Iqbal Howlader, vice president of the Financial Administration Division.

Additionally, in February, a Dhaka court imposed a travel ban on the NRBC Bank chairman over allegations of stock market manipulation, financial crimes, illegal earnings, and money laundering.

The newly formed NRBC Bank board is chaired by independent director Md Ali Hossain Pradhania, former managing director of Bangladesh Krishi Bank. 

Other directors include former Bangladesh Bank executive directors Md Abul Bashar and Md Anwar Hossain, former Sonali Bank deputy managing director Md Nurul Haque, Supreme Court advocate Barrister Md Shafiqul Rahman, American International University-Bangladesh professor Syed Abul Kalam Azad, and chartered accountant Muhammad Emdad Ullah.

NRB Bank board restructured without new chairman

Mohammed Mahtabur Rahman (Nasir), the chairman of NRB Bank, was removed, but no new chairman has been appointed. 

The bank's board has been restructured, with new directors including sponsor shareholder Iqbal Ahmed OBE, former Grameen Bank board member Ferdous Ara Begum, former Bangladesh Bank executive director Sheikh Md Selim, former Mercantile Bank managing director Md Kamrul Islam Chowdhury, former Prime Bank deputy managing director Sheikh Motiur Rahman, North South University accounting and finance professor Sharif Nurul Ahkam, and chartered accountant Mizanur Rahman.

Three banks' NPL ratios 

According to the 2023 annual reports, the three dissolved banks had non-performing loan (NPL) ratios below 6%, whereas the overall banking sector's NPL stood at around 9%. By the end of 2024, the sector's NPL ratio had surged to 17%.

As of 2023, NRB Bank had Tk6,685 crore in deposits against Tk6,007 crore in loans and advances, with an NPL ratio of 4.98%. 

NRBC Bank held Tk17,567 crore in deposits against Tk14,509 crore in loans and advances, with an NPL ratio of 5.35%. 

Meghna Bank had Tk6,502 crore in deposits against Tk5,204 crore in loans and advances, with an NPL ratio of 4.53%.