Under pressure from high levels of government, Bangladesh Bank (BB) has handed management of Al-Arafah Islami Bank back to its old sponsors, so that people accused of irregularities and unethical conduct have found places on the new board. Two directors had to be dropped within two days of their appointment.
The reshuffle brings the bank’s main control to the Chattogram-based KDS Group. During the Awami League government, KDS Group was involved in Al-Arafah as well as National Bank, and in both the controversial S Alam Group was also linked.
Soon after the reshuffle, some newly appointed directors moved to bring back officials earlier sacked or accused over irregularities; several such officials were seen at the new board’s first meeting, and a deputy managing director (DMD) was allegedly forced to resign — spreading fresh fear and unease among staff. The bank’s newly elected chairman, Badiur Rahman, said his main task was to run the bank professionally so that no new irregularities occurred, and that those sacked over specific allegations could not be brought back. Protecting depositors’ interests, he said, was his priority.
How the board was formed
Al-Arafah was under S Alam Group control during the Awami League government, chaired by S Alam’s (Saiful Alam) brother Abdus Samad Labu, with KDS Group also active. After August 2024, BB dissolved the board and formed an independent board chaired by former LankaBangla Finance managing director Khaja Shahriar, with independent directors including Md Shahin Ul Islam, Md Abdul Wadud, M Abu Yusuf and Mohammad Ashraful Hasan. Audits during their tenure surfaced various irregularities.
After the BNP government took office in February, two groups moved to take control. KDS Group sought its ownership back, while another side — including former director and current Religious Affairs Minister Kazi Shah Mofazzal Hossain (Kaikobad) — claimed board seats for its shares. From a level of government, control was handed to those holding 2 percent shares from both sides, while the five independent directors were retained.
Of the 14 shareholders BB appointed to the board, six are KDS Group leaders or their relatives: KDS chairman Khalilur Rahman, his son Selim Rahman, his brother Ahmedul Haque, and representative directors of KDS Garments (Mahbub Ahmed), KDS Textile (Farid Uddin Ahmed) and KY Steel Mills (Mohammad Sharif Uddin Taslim). The new chairman, Badiur Rahman, is also connected to the KDS family. Other directors include Md Enayat Ullah, who contested the last election for Jamaat from Dhaka-7, along with Rafiqul Islam, Imadur Rahman, Nazmul Ahsan Khaled, Anwar Hossain, Abdus Salam and Liaquat Ali Chowdhury.
Because appointing five KDS directors drew objections, on BB’s instruction Farid Uddin Ahmed and Mohammad Sharif Uddin Taslim did not take up their posts — the Bank Company Act bars more than three directors from one family or group — and BB appointed Khondaker Mezbah Uddin Ahmed instead. A BB official, speaking on condition of anonymity, said several banks had run on independent directors for more than two years, and that while BB had wanted them returned to good, genuine shareholders, “the start was not good,” with Al-Arafah handed to one group under high-level government pressure.
The board meeting
The board was reconstituted on July 15, and an emergency meeting was held the next day, electing former chairman Badiur Rahman as chairman and KDS’s Selim Rahman as executive committee chairman. Two directors who were present said sacked officials, including Shahed Siddiqui, attended; the meeting of 19 directors, meant to have at most 25 people, drew more than 40, and some cheered the KDS representatives’ return while the independent directors stayed silent.
Alleged irregularities
The international auditor KPMG and the bank’s internal investigation found that two former chairmen had irregularly bought luxury Mercedes-Benz cars worth 5.5 crore taka for their use. One was Selim Rahman, now the bank’s executive committee chairman; the other was former chairman Abdus Samad Labu, S Alam’s brother. According to the findings, a June 2022 board meeting approved a car within a 1 crore taka limit for then-chairman Selim Rahman, but a Mercedes was bought for 2.23 crore taka — 1.23 crore over the limit. Similarly, in August 2023, another Mercedes was bought for Abdus Samad for 3.23 crore 67 lakh taka without any approval. To conceal the spending, the cars were registered in the names of two subsidiaries rather than the bank, and general suspense and adjustment accounts were used; they were never entered in fixed-asset registers. On BB’s objection, the cars have since been brought into the bank’s custody, show-cause notices issued to those involved, and a plan drawn up to recover the unauthorized money.
KDS chairman Khalilur Rahman had chaired National Bank when S Alam took it over late in the Awami League era; BB removed him after the party’s fall, and he now becomes an Al-Arafah director. He faces several cases over irregularities during his National Bank tenure and was jailed in February after being arrested in an Anti-Corruption Commission (ACC) case.
Al-Arafah at a glance
Founded in 1995, Al-Arafah Islami Bank had deposits of 54,365 crore taka at the end of last December, with loans and investments of 50,121 crore; 17.61 percent of its loans are non-performing. It made a net profit of 85 crore taka last year but paid no dividend for 2024 or 2025 because of high defaults, moving to the “Z” category on the stock market. It has 226 branches nationwide and 5,593 staff.
Former Bangladesh Bank chief economist Mostafa K Mujeri said it was normal for shareholder directors to run banks, “but the nation has seen what they did all this time,” leaving many depositors unable to get their money back. Appointing people who could pose even minimal risk to the bank was not right, he said, and directors should be chosen after reviewing their past. It would be unfortunate for the nation, he added, if Bangladesh Bank were again used under anyone’s influence.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report