Introduction to the Crisis
The Bangladesh Bank (BB) has taken a significant step to ensure the stability of Standard Bank, a Shariah-based bank, by appointing an observer to monitor its operations closely. This move comes amidst alleged internal conflicts between board members that have been affecting the bank’s decision-making process.
Background of the Conflict
The central bank appointed Md Sharafat Ullah Khan, director of the Payment Systems Department, as the observer. According to BB Executive Director and spokesperson Arif Hossain Khan, this decision was made in view of the current situation at the bank. Md Sharafat Ullah Khan will attend board meetings and other vital meetings at Standard Bank as part of the BB’s enhanced supervision.
The Cause of the Conflict
The conflict within the bank’s board began after the fall of the previous government. The 16-member board of the private bank has reportedly split into two camps over various issues. One faction is led by the Chairman, Mohammed Abdul Aziz, while the other is steered by his son and vice-chairman, AKM Abdul Alim. Bank officials, speaking on the condition of anonymity, stated that the feud has paralyzed decision-making, with board meetings often ending in arguments over staffing and management matters.
History of Standard Bank
Standard Bank began its operations on June 3, 1999. In January 2021, it became a full-fledged Shariah-based Islamic bank after receiving approval from Bangladesh Bank. The bank has a complex history, with Kazi Akram Uddin Ahmed, a businessperson and relative of deposed Prime Minister Sheikh Hasina, serving as the chairman for years. However, following the political shift, Mohammed Abdul Aziz assumed the role.
Irregularities and Financial Decline
An earlier BB inspection found various irregularities involving the bank’s former chairman, Kazi Akram, and his son, former director Kazi Khurrum Ahmed. These issues contributed to the bank’s financial decline, according to the central bank report. At the end of September last year, the bank’s defaulted loans stood at Tk 5,884 crore, accounting for 29.14 percent of its total disbursed loans. During the same period in 2024, its classified loans amounted to Tk 1,679 crore, or 8.62 percent of total disbursed loans.
Conclusion
The appointment of an observer by the Bangladesh Bank marks a significant step towards addressing the internal conflicts and financial irregularities within Standard Bank. The move is expected to enhance supervision and ensure the bank’s stability, ultimately protecting the interests of its customers and stakeholders. As the bank navigates through these challenges, it is crucial for the board members to put aside their differences and work towards the bank’s recovery and growth. The success of Standard Bank is not only important for its customers but also for the overall banking sector in Bangladesh.
