BB dissolves National Bank board again, forms new 7-member board

The Bangladesh Bank has dissolved the board of directors of the National Bank on the grounds of numerous irregularities for the third time.

According to an order issued by Governor Ahsan H Mansur on Tuesday, the banking regulator dissolved the National Bank's board to protect the depositors' money and public interest.

The order states that the National Bank Limited board is involved in activities contrary to the interests of the bank company and depositors by disrupting the financial condition of the bank due to policy-making weakness.

Besides, the central bank has formed a new seven-member board which has three directors and four independent directors.

The three directors are shareholders of the bank BNP Vice-Chairman Abdul Awal Mintoo, Moazzem Hossain and Zakaria Taher.

Independent directors are former Bangladesh Bank executive director Md Zulkar Nain, Shimanto Bank PLC former managing director Mukhlesur Rahman, University of Dhaka's Institute of Business Administration (IBA) Professor Dr Melita Mehjabeen, and Chartered Accountant Md Abdus Sattar Sarker.

In December last year, the Bangladesh Bank dissolved the National Bank's board on the recommendation of the Bangladesh Securities and Exchange Commission.

On that board, Syed Ferhat Anwar, a former professor of Dhaka University's IBA, was appointed as the new chairman of the bank. Then just four months later in May 2024, the central bank again dissolved the National Bank board.

The dissolution came just days after the bank's board of directors declined to merge with United Commercial Bank (UCB).

"Without any discussion, the central bank decided to merge National Bank with UCB. On 9 April, the last working day before Eid, fear spread among the depositors and officials after knowing this decision. Many people started withdrawing money from the bank," an official told TBS at the time. 

The official also claimed that 200 of its 211 branches were showing profits. 

"Some branches in Dhaka are in losses due to high defaulted loans. We have started collecting money from the defaulters," the National Bank official further said. 

Although the official said it would take years to improve some of the indicators of the bank, the axe came swiftly in the first week of May.

A new 10-member board was formed again, headed by chairman Khalilur Rahman, and included three independent directors, with no one left from the family of National Bank founder late Zainal Haque Sikder serving as director. 

The new board had grand plans of injecting Tk1,000cr to help the bank which was bleeding money due to losses piling up. 

At a press briefing following its formation, the board chairman Khalilur Rahman pledged to raise Tk4,000 crore in capital, with an initial infusion of Tk1,000 crore from directors or shareholders and the remaining Tk3,000 crore through deposits.

This, however, never came to fruition.

On Wednesday, The Business Standard reported that the National Bank had been forced to waive Tk2,310 crore in interest on loans to S Alam Group, a conglomerate closely tied to the ousted Hasina government and various affiliated companies.

On 22 December 2021, the central bank wrote to the then-managing director of the National Bank, instructing him to waive the interest on loans taken by various companies of S Alam Group and to restructure the remaining loans. 

The Bangladesh Bank sent separate letters to each of the borrowing companies, and The Business Standard has seen six such letters.