Stricter rules on alternate directors: Many at risk of losing bank board seats 

Following the fall of the Awami League government, many bank directors and chairmen who fled abroad and avoided meetings are now at risk of losing their positions due to the central bank's strict policy on appointing "alternate directors."

The Bangladesh Bank today (15 January) introduced a requirement for prior approval from the money market regulator for the appointment of "alternate directors," preventing directors abroad from appointing a chosen alternate without approval.

A February 2024 circular required notifying the central bank of alternate director appointments seven working days in advance, but did not mandate prior approval.

Ala Uddin, a director of the Bangladesh Bank, told The Business Standard that many directors appoint individuals of their choice as alternate directors during their absence. 

"However, becoming a director requires meeting certain qualifications, including strong business skills, acumen, and personal integrity. This is why we have issued such instructions," he added.

An executive director of the central bank, speaking anonymously, said, "This new condition is timely. Many bank directors who fled abroad after embezzling billions want to appoint someone of their choice as an 'alternate director' in their absence, despite holding positions on paper."

He said that according to the Bank Companies Act and Bangladesh Bank guidelines, if a director misses three consecutive meetings or is absent for three months, their position becomes vacant, whichever period is longer.

The option to attend bank meetings remotely, which was available during the Covid-19 pandemic, continued afterward, allowing members of the executive, audit, and risk management committees, as well as the board of directors, to participate. 

However, this opportunity was revoked after the government change in August last year amid a student-led mass uprising.

According to sources, Awami League treasurer and Meghna Bank Chairman HN Ashiqur Rahman was allowed to join meetings online. 

Other directors benefiting from this arrangement include former Dhaka South City Corporation mayor Sheikh Fazle Noor Taposh, the wife of former foreign minister Hasan Mahmud, the cousin of former land minister Saifuzzaman Chowdhury, his brother's wife, the son of former textiles and jute minister Golam Dastagir Gazi, the son of a former local government minister, and the wife of Awami League Presidium member Kazi Zafar Ullah.

The Bangladesh Bank has restructured the boards of directors of 11 banks that witnessed major irregularities during the Awami League's tenure. The banks include Islami, Social Islami, Global Islami, Union, National, First Security Islami, Bangladesh Commerce, Al-Arafah Islami, IFIC, Exim, and United Commercial Bank (UCB). 

Eight of these banks were controlled by the S Alam Group, closely linked to ousted prime minister Sheikh Hasina. 

One bank was controlled by former prime minister's adviser Salman F Rahman, another by the family of former land minister Saifuzzaman Chowdhury, and one by Nazrul Islam Majumder, former chairman of the Bangladesh Association of Bankers. 

Following the political change, the chairmen of Mercantile, Citizen, and South Bangla Agriculture and Commerce Bank resigned.

Directors of banks approved and taken over by the Awami League, including members of the Sheikh family, former ministers, MPs, Awami League-backed businessmen, professionals, and their family members, are at the highest risk of losing their positions.