Bangladesh Bank (BB) has found serious irregularities at NRB Commercial (NRBC Bank PLC, including suspicious transactions, misleading information about an entrepreneur director’s identity and discrepancies in shareholding.
The central bank has fined the private bank Tk500,000 for concealing information about unusual transactions.
Additionally, the bank misled the central bank regarding the identity of its sponsor-director, Abu Bakr Chowdhury, and provided incorrect information about expatriates’ shares, prompting the BB to issue a show-cause notice to the bank and all its directors, seeking an explanation.
In a letter sent by its Bank Inspection Department-3 to the NRBC Bank managing director (MD) on 20 October, the BB directed it to reduce the shareholding of expatriates to 50%.
BB sources indicate that these actions against NRBC Bank are based on a detailed report of inspection conducted in February last. Previously, the bank was asked for explanations at various stages, but no satisfactory responses were received.
A BB official told the Daily Sun that the NRBC Bank’s irregularities have been under scanner for a long time. “However, no action could be taken due to obstructions from the top-level management. Now, with the change in circumstances, actions are being initiated.”
He further noted that if the irregularities and interference by the board of directors continue, the central bank may assign an independent board to take over the management of NRBC Bank.
Attempts to contact acting MD Md Rabiul Islam (current duty) of the private bank the phone for his versions regarding these issues were unsuccessful.
A BB official revealed that NRBC Bank’s founding chairman, Engineer Farasath Ali, along with five other directors had previously lost their positions due to direct involvement in various irregularities and fraud. The central bank banned Farasath Ali for his involvement in loan fraud and other misconduct.
Concealing unusual transactions
It has been revealed that NRBC Bank concealed information about unusual transactions in the savings account of its customer, Md Rezaul Bashir Chowdhury, at its OR Nizam Road branch in Chattogram. Despite identifying the transactions as abnormal or suspicious, the bank failed to report to the Bangladesh Financial Intelligence Unit (BFIU).
Due to the failure to submit a timely report to it, the central bank fined NRBC Bank Tk500,000 under the Anti-Money Laundering Act.
In its letter, the BB stated that if the fine is not paid within seven days, the amount will be recovered by adjusting it from NRBC Bank’s current account with the central bank.
Additionally, the bank has been instructed to identify the roles and responsibilities of all officials involved in the transactions, including the branch manager, the branch’s Anti-Money Laundering compliance officer and the bank’s chief compliance officer, who were in service from 18 May 2021 to 7 April 2022.
The bank has been directed to take appropriate disciplinary action against those responsible and report back within 30 days.
Concealing Director’s Identification Information
NRBC Bank also concealed information regarding the identification documents of its sponsor-director, Abu Bakr Chowdhury. The bank informed the central bank that it did not have a copy of Abu Bakr’s national identity (NID) card on record. However, during an inspection, Bangladesh Bank discovered that a copy of his NID was stored in the documents of Baizid Steel Industries, a company owned by him, at the bank’s OR Nizam Road branch.
The NID number was mentioned in the account opening form under the owner’s personal information. This indicates that the bank provided false information to Bangladesh Bank during the process of purchasing sponsor shares.
The central bank has sought an explanation from NRBC Bank regarding why punitive actions should not be taken under Section 109(2) of the Bank Company Act for providing false information or statements. This includes actions against director Abu Bakr Chowdhury, all other directors, the managing director, the company secretary and the responsible officers of the relevant departments.
Each individual has been instructed to submit a separate explanation within 14 days, as required under Section 109(9) of the law, which prescribes a minimum fine of Tk100,000 and a maximum penalty of three-year imprisonment.
The letter has further instructed NRBC Bank to re-verify the legal residency status of all expatriate sponsor shareholders and submit a detailed report with relevant documentation within 30 days of receiving the notice.
Concealing Shareholding Information
The private bank also concealed information about its shareholding structure. In its report to Bangladesh Bank, the bank claimed that 68% of its shares are held by sponsor-directors, while 32% are owned by general investors. However, a central bank inspection found this information to be inaccurate.
As a result, Bangladesh Bank instructed the bank to reduce the shareholding of expatriate sponsors to 50% within six months. Failure to comply will result in punitive action under the Bank Company Act.
The letter has further stated that due to non-compliance with the conditions of the banking licence, the responsible officials have demonstrated incompetence and negligence in their duties.
The bank has been directed to take appropriate administrative action against these officials within one month and submit relevant documentation to the central bank as evidence.
BDST: 1024 HRS, OCT 28, 2024
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