Bangladesh Bank has unearthed a number of irregularities in appointment of alternate directors, interior decoration of branches and loan sanction at newly-established NRB Commercial Bank Ltd.
A recent BB inquiry found that the bank had not sent any Credit Information Bureau information of its newly-appointed eight alternate directors.
The board of directors of the bank approved 10 alternate directors in its meeting held on August 24, 2014, but the bank did not inform the central bank the decision within seven days in line with BB directives.
The bank informed the central bank the decision on November 25, 2014 after two months of the board meeting but it did not provide the detailed information including the CIB report of the alternate directors.
The bank provided the CIB report of only two alternate directors on January 29, 2015 to the central bank but it avoided giving the information of eight other alternate directors.
According to the BB rules, a director of a bank will be allowed to appoint alternate director if he or she stays abroad for at least three months or above in a row.
Banks have to preserve the directors’ information on the date of their going abroad and expected return to the country.
But, NRB Commercial Bank did not preserve any information about their directors who were staying abroad, the BB report said.
The bank appointed SG Faruq as an alternate director against ABM Abdul Mannan in its board meeting held on August 24, 2014.
Despite appointing an alternate director, Mannan attended three board meetings which were held on September 2 and 24 and November 9 last year violating the banking regulations.
On the other hand, Faruq attended four board meetings between January and May of 2014 before receiving appointment as an alternate director.
A BB official told New Age on Thursday that Faruq had attended the board meetings as an outsider that was strictly forbidden by the central bank’s rules.
The BB inspection team unearthed that the bank had conducted irregularities to appoint civil contractor to complete the interior decoration of its ten new branches.
The board of the bank enlisted 12 organisations including Dream Interior and BH Interior as civil contractors and interior decorators.
BH Interior obtained work orders to complete interior decorations of the bank’s three branches — Gulshan, Agrabad and Chatkhil.
But, the bank gave the work order amounting to Tk 59.55 lakh for its Gulshan branch in favour of BH Interior without issuing any tender.
The central bank inspection team did not find any copy of approval of the board’s executive committee for the work order.
The bank gave the work order in favour of Dream Interior to complete the interior decorations of its seven branches — Dhanmondi, Maona, Gorai, Nobinagar, Board Bazar, Chandraganj and Rajshahi.
Of the seven branches, the bank gave the work orders of three branches — Rajshahi, Nobinagar and Chandraganj — to Dream Interior avoiding the lowest bidder of the tender ignoring its (bank’s) purchase committee’s recommendation.
The owners of BH Interior and Dream Interior are relatives of Mercantile Bank director Md Sohidul Ahsan, according to the BB report.
NRB Commercial Bank managing director Dewan Mujibur Rahman sanctioned secured overdraft loan worth Tk 5.75 crore to AG Agro Industries Ltd owned by Sohidul violating the bank’s credit policy.
According to the bank’s credit policy, the managing director will be allowed to sanction maximum loan Tk 5 crore to a single client.
AG Agro Industries received the loan against its four fixed deposits amounting to Tk 6.39 crore with the Uttara branch of the bank.
The BB report said that AG Agro Industries did not use the loan for its own financial purpose as the company diverted the fund to the accounts of other companies.
The company diverted the fund in favour of Ridwan Tower and Benison Packaging and Printing although it applied for the loan to meet its own financial requirement.
The Uttara branch of the bank sanctioned a term loan of Tk 50 lakh to Mark Distribution and Logistics owned by M Jahedul Anowar to meet its working capital.
The BB report said disbursing a term loan in order to meet working capital of a company was a serious violation of rules.
Mark Distribution and Logistics applied for the loan without showing any date on its letter pad to the bank.
The bank’s audit committee chairman, Mohammed Adnan Imam, hid its business information when he got the directorship of the bank.
Adnan hid his directorship in a merchant bank named First Securities Services Ltd that is a punishable offence, the BB official said.
First Securities Services faced financial penalty two times from the Bangladesh Securities and Exchange Commission due to its irregularities.
The BB issued a letter to the managing director of NRB Commercial Bank on March 31, 2015 asking him to take punitive measures against the officials involved with the loan scam by April 23, 2015.
Besides, he has been asked to explain the irregularities conducted by the board of directors of his bank.
When asked about the irregularities Dewan Mujibur Rahman told New Age on Thursday that the bank failed to preserve the information as the expatriate Bangladeshi directors of his bank felt shy to give their passport-related travelling data.
He said that his bank had given the work orders to BH Interior and Dream Interior to complete the decorations-related activities of the branches hurriedly.
He claimed that the bank had given the work orders to the two companies in the lowest rates among the bidders.
A recent BB inquiry found that the bank had not sent any Credit Information Bureau information of its newly-appointed eight alternate directors.
The board of directors of the bank approved 10 alternate directors in its meeting held on August 24, 2014, but the bank did not inform the central bank the decision within seven days in line with BB directives.
The bank informed the central bank the decision on November 25, 2014 after two months of the board meeting but it did not provide the detailed information including the CIB report of the alternate directors.
The bank provided the CIB report of only two alternate directors on January 29, 2015 to the central bank but it avoided giving the information of eight other alternate directors.
According to the BB rules, a director of a bank will be allowed to appoint alternate director if he or she stays abroad for at least three months or above in a row.
Banks have to preserve the directors’ information on the date of their going abroad and expected return to the country.
But, NRB Commercial Bank did not preserve any information about their directors who were staying abroad, the BB report said.
The bank appointed SG Faruq as an alternate director against ABM Abdul Mannan in its board meeting held on August 24, 2014.
Despite appointing an alternate director, Mannan attended three board meetings which were held on September 2 and 24 and November 9 last year violating the banking regulations.
On the other hand, Faruq attended four board meetings between January and May of 2014 before receiving appointment as an alternate director.
A BB official told New Age on Thursday that Faruq had attended the board meetings as an outsider that was strictly forbidden by the central bank’s rules.
The BB inspection team unearthed that the bank had conducted irregularities to appoint civil contractor to complete the interior decoration of its ten new branches.
The board of the bank enlisted 12 organisations including Dream Interior and BH Interior as civil contractors and interior decorators.
BH Interior obtained work orders to complete interior decorations of the bank’s three branches — Gulshan, Agrabad and Chatkhil.
But, the bank gave the work order amounting to Tk 59.55 lakh for its Gulshan branch in favour of BH Interior without issuing any tender.
The central bank inspection team did not find any copy of approval of the board’s executive committee for the work order.
The bank gave the work order in favour of Dream Interior to complete the interior decorations of its seven branches — Dhanmondi, Maona, Gorai, Nobinagar, Board Bazar, Chandraganj and Rajshahi.
Of the seven branches, the bank gave the work orders of three branches — Rajshahi, Nobinagar and Chandraganj — to Dream Interior avoiding the lowest bidder of the tender ignoring its (bank’s) purchase committee’s recommendation.
The owners of BH Interior and Dream Interior are relatives of Mercantile Bank director Md Sohidul Ahsan, according to the BB report.
NRB Commercial Bank managing director Dewan Mujibur Rahman sanctioned secured overdraft loan worth Tk 5.75 crore to AG Agro Industries Ltd owned by Sohidul violating the bank’s credit policy.
According to the bank’s credit policy, the managing director will be allowed to sanction maximum loan Tk 5 crore to a single client.
AG Agro Industries received the loan against its four fixed deposits amounting to Tk 6.39 crore with the Uttara branch of the bank.
The BB report said that AG Agro Industries did not use the loan for its own financial purpose as the company diverted the fund to the accounts of other companies.
The company diverted the fund in favour of Ridwan Tower and Benison Packaging and Printing although it applied for the loan to meet its own financial requirement.
The Uttara branch of the bank sanctioned a term loan of Tk 50 lakh to Mark Distribution and Logistics owned by M Jahedul Anowar to meet its working capital.
The BB report said disbursing a term loan in order to meet working capital of a company was a serious violation of rules.
Mark Distribution and Logistics applied for the loan without showing any date on its letter pad to the bank.
The bank’s audit committee chairman, Mohammed Adnan Imam, hid its business information when he got the directorship of the bank.
Adnan hid his directorship in a merchant bank named First Securities Services Ltd that is a punishable offence, the BB official said.
First Securities Services faced financial penalty two times from the Bangladesh Securities and Exchange Commission due to its irregularities.
The BB issued a letter to the managing director of NRB Commercial Bank on March 31, 2015 asking him to take punitive measures against the officials involved with the loan scam by April 23, 2015.
Besides, he has been asked to explain the irregularities conducted by the board of directors of his bank.
When asked about the irregularities Dewan Mujibur Rahman told New Age on Thursday that the bank failed to preserve the information as the expatriate Bangladeshi directors of his bank felt shy to give their passport-related travelling data.
He said that his bank had given the work orders to BH Interior and Dream Interior to complete the decorations-related activities of the branches hurriedly.
He claimed that the bank had given the work orders to the two companies in the lowest rates among the bidders.
Source: New Age