On Thursday, the central bank dissolved the previous board of Islami Bank PLC and reconstituted it by appointing the former managing director of Rupali Bank PLC Md Obayed Ullah Al Masud as the chairman of the new board.
The central bank has already issued instructions stating that the banking regulator reconstituted the board to protect the depositors and the largest unconventional bank in the country as a whole.
Other independent directors of the five-member body are former BB executive director Muhammad Khurshid Wahab, former deputy managing director of Al-Arafah Islami Bank PLC Md Abdul Jalil, ex-professor of Dhaka University's Department of Finance Dr M Masud Rahman and chartered accountant Md Abdul Salam.
The latest change in the Islami Bank board comes a day after the new BB governor Dr Ahsan H Mansur hinted at the changeover in the operational board of the Sharia-based commercial lender, which has been facing serious pressure since the Chattogram-based controversial business conglomerate S Alam Group took over the bank in 2017.
Regarding the reconstitution of the board, the BB governor said they want to bring stability to the country's largest Islamic bank, which is currently experiencing a liquidity crunch mainly due to the looting of public funds over the years by the S Alam Group and its associates.
"We don't want to run it permanently by the nominated board. We reconstituted it to find a way out of this situation," he said.
Dr Ahsan H Mansur said the interim government decided to form a banking commission to deal with the governance issues of poorly performing banks and to make them compliant.
Then the banking regulator will release the restructured banks to private ownership. "But this will be done through a fit and proper test for qualified people," he said.
A good amount of funds has been looted from the poorly governed banks linked to the S Alam Group and a portion of the money is feared to have been taken out of the country, while some is still within the country, said the central bank governor.
"We need to pursue both channels to recover the looted assets both at home and abroad. We also want to establish an asset recovery institute for this purpose," he said.
Regarding the central bank's policy towards problematic banks facing a changeover of their boards, he said that any former directors holding 2.0 per cent of share capital will be considered for the board.
However, those involved in loan-related irregularities will not be allowed. "We will sell their shares if they do not repay their loans and compensate as much as we can," he added.
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