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is a director of Agrocrop Limited and holds a 16 percent stake in the company -- which has loans totalling Tk 3.56 crore from First Security Islami Bank and Meghna Bank, of which Tk 2.79 crore is classified.
Under the Bank Company Act (Amendment) 2023, a loan defaulter is not eligible to serve as a bank director. BB regulations also bar wilful defaulters from serving as directors for five years even after they are removed from the default list.
However, central bank officials said, if an individual is a guarantor to a spouse’s classified loan, that person would not be eligible to serve as a director.
The Daily Star could not know whether Alam is a guarantor to his wife’s loans.
On May 24, BB appointed Alam, a former deputy governor, as chairman of Islami Bank, hours after the previous chairman resigned and a day before the country entered a nearly week-long Eid holiday.
The appointment sparked debate in the banking sector. Many alleged that Alam’s role was controversial during the tenure of the Awami League government, when S Alam, a Chattogram-based businessman, took control of several Shariah-based banks and was involved in loan irregularities.
However, Supreme Court lawyer Ashraful Hadi said a person seeking to become a bank director must declare that no loans taken by the person or their allied concerns from any bank or financial institution have become classified.
“The question is how Bangladesh Bank can approve the appointment of a person as an independent director and board chairman when his wife is a loan defaulter. If this is allowed, spouses or family members of loan defaulters can become directors of banks and financial institutions.
“Even from a moral standpoint, family members of loan defaulters should not be allowed to sit on the board of a financial institution.”
As the regulator, Bangladesh Bank has a legal and moral responsibility to oversee such matters, he said.
“Moreover, if the independent director is a former employee of Bangladesh Bank, one should examine whether there is any potential conflict of interest, directly or indirectly. The ethical responsibility of Bangladesh Bank is very high.”
PROTESTS CONTINUE
Members of the Islami Bank Conscious Customers’ Forum continued their sit-in programme for a second consecutive day yesterday in Dilkusha, Motijheel, demanding the resignation of the newly appointed Islami Bank Bangladesh PLC chairman and the implementation of their seven-point demands.
At a press conference held in front of the bank’s headquarters at noon, forum leaders formally announced the demands, which were presented by the forum’s convener, Nur-un-Nabi.
The demands include the resignation of Khurshid; the reinstatement of Omar Faruk Khan as managing director of Islami Bank; and the removal of all individuals allegedly involved in financial irregularities from the bank’s board.
They also include the repeal of Section 18A of the Bank Resolution Act; the recovery of funds allegedly siphoned off through the sale of assets and ownership stakes held by S Alam Group within the country; measures to ensure that S Alam Group cannot regain influence over Islami Bank or any other bank; and bringing those responsible for looting banks, including Islami Bank, to justice and ensuring exemplary punishment.
At the press conference, forum leaders also strongly criticised comments made by Bangladesh Bank spokesperson Arief.
Speaking to journalists on Monday, he said members of a certain political party were attempting to create instability surrounding Islami Bank and that Bangladesh Bank’s decisions would not be changed through street protests.
Yesterday morning, protesters launched a demonstration, a day after the Shariah-based bank witnessed protests, police action, and internal disorder.
Under the banner of the Islami Bank Conscious Customers’ Forum, they began demonstrating at around 9:30am in front of the bank’s headquarters in Dhaka.
They opposed a virtual board meeting held on Monday night, during which the board accepted the resignation of former Managing Director Omar Faruk Khan.
They also criticised the board’s recent decisions and demanded sweeping changes to its leadership.
The protesters also demanded the resignation of all board members of Islami Bank, the country’s largest Shariah-based lender.
Earlier on Monday, Islami Bank witnessed chaos throughout the day as a section of customers protested against recent changes in the bank’s top leadership.
Police used sound grenades and water cannons in Motijheel to disperse hundreds of protesters under the banner of the Conscious Customers’ Forum, who demanded that Bangladesh Bank cancel the appointment of Islami Bank’s new chairman and reinstate the recently resigned managing director. The clashes left many injured.
On August 6, 2024, Alam was among the top central bank officials forced out by protesters following the fall of the Sheikh Hasina-led government.
The appointment has since sparked controversy in the banking sector and triggered protests by a section of customers.
The protests disrupted Monday’s scheduled board meeting, but the bank later obtained approval from the central bank and held the meeting virtually at night, with Alam presiding.