Exim Bank freed from the grip of Mazumder

The control of influential businessman Nazrul Islam Mazumder over Exim Bank ended yesterday as the Bangladesh Bank reconstituted the board of the Shariah-based lender.
Mazumder, who founded the bank along with Shahjahan Kabir in 1999, has been its chairman since 2007. His wife Nasreen Islam was also removed from the reconstituted five-member board.
The couple’s shareholding in the bank stood at 6 percent after transferring a portion of their shares to their children — Walid Ibne Islam and Anika Islam — in November 2022.
Mazumder’s removal from his bank board comes on the heels of the Bangladesh Financial Intelligence Unit’s order to freeze his bank accounts and his family members.
He, however, remains the chairman of the private bank owners’ forum Bangladesh Association of Banks since 2009, a position he leveraged to extract benefits from the previous Awami League regime of 15 years.
Mazumder, also the chairman of garment exporter Nassa Group, exerted his influence to change critical policies for the banking sector such that it favoured his businesses. He also took loans bypassing rules and regulations, according to people with knowledge of the matter.
For instance, at the 654th board meeting of Janata Bank in 2021, a Tk 261 crore interest waiver facility was approved for two concerns of Mazumder’s Nassa Group: Nassa Taipei Spinners and Nassa Spinners.
The central bank initially rejected the facility as Janata approved the waiver violating banking norms but later walked back on the decision.
To ensure his access to the power centre, he would collect funds from banks and personally hand the cheque over to the former Prime Minister Sheikh Hasina, according to the managing directors of banks who spoke on the condition of anonymity.
The new board was constituted as per section 45 of the Bank Companies Act, 1991 to protect the interests of depositors and ensure good governance, said the BB letter to the Exim Bank managing director.
As of last year, Exim Bank’s total outstanding loans stood at Tk 46,937.63 crore and defaulted loans of Tk 1,629.46 crore, as per data from the central bank. However, bank insiders said the actual volume of bad loans is much higher than that.
Md. Nazrul Islam Swapan, Md. Nurul Amin and Anjan Kumar Saha were retained on the new board. Swapan, who is a sponsor-director, holds 3.54 percent shares of the bank, while Saha holds 2 percent shares. Amin, also a sponsor-director, holds 2 percent shares.
Two new independent directors — SM Rezaul Karim, executive director of the central bank, and Khandaker Mamun, a chartered accountant — were added to the new board.
The previous government had decided to merge another crisis-hit Padma Bank with Exim Bank, a move that faced widespread criticism from different corners and was eventually put on hold.
Earlier, the BB reconstituted the boards of National Bank, Islami Bank Bangladesh, Social Islami Bank, Global Islami Bank, Union Bank and United Commercial Bank.
The central bank plans to reconstitute the board of more ailing banks next week.