Top executives of five more unconventional banks are set to be sent on leave for 90 days by their boards for independent functioning of an upcoming forensic audit of their financials by globally recognised firms.
The exigent shakeup is coming following the footstep of the First Security Islami Bank.
Four of the six banks were controlled by the controversial business conglomerate S. Alam Group before the changeover in state power through the July-August mass uprising.
The decisions on forced leave come following regulatory instruction as part of government's reforms move to conduct asset-quality review (AQR) in the crisis-hit commercial banks.
Bangladesh Bank (BB) Governor Dr Ahsan H. Mansur sat for a meeting with the chairmen of the six shariah-based banks -- First Security Islami Bank, Social Islami Bank, Global Islami Bank, EXIM Bank, Union Bank and ICB Islami Bank -- on Sunday at the central bank's headquarters where the instruction was issued, meeting-insiders said.
A day before, operational board of the First Security Islami Bank sent its managing director Syed Waseque Md Ali on leave for 90 days as part of conducting an independent review of the bank's asset quality.
The forensic audit is funded by the Manila-based Asian Development Bank under a project titled asset-quality review of the weak banks involving more than $1.0 million. And two of the big four global accounting firms -- Ernst & Young (EY) and Klynveld Peat Marwick Goerdeler (KPMG) -- have been appointed to do the special auditing.
Spokesperson for Bangladesh Bank Husne Ara Shikha says it is the coordinated decision of boards of the banks to send their managing directors on leave and the decision is taken so that the top executives of the banks cannot make any intervention during the AQR process.
"It is the preliminary initiative to keep the AQR process transparent," she says.
"If the managing directors are not found involved in any wrongdoing in the audit, they will be able to rejoin office. If they are found engaged in any unethical practice, they (board and regulator) need to think differently," says Ms Shikha, also an executive director of the banking regulator.
Seeking anonymity, a BB official said the central bank should have taken such move much earlier, even before the direct cash feeding to the liquidity crisis-ridden commercial banks due to massive loan-related irregularities.
The BB official says the move comes at a time when some of the struggling banks have slowly been rebounding from the disasters riding on the BB cash supports. "I hope it will not create any problem as depositors started returning into the banks," the central banker adds.
According to BB data, the central bank approved direct cash supports equivalent to around Tk 300 million to eight commercial banks. Of them, the six banks accounted for over Tk 200 million.
Former lead economist at World Bank's Dhaka office Dr Zahid Hussain hails the decision, saying that there is a possibility of intervening in the AQR process if the top executives are in place.
"I don't think this temporary removal of the managing directors from the banks would cause any problem to ongoing rebuilding process. Instead, it would help regain confidence of the depositors because of the wrongdoing takes place at the time when they were in charge," the economist notes.
Dr M Masrur Reaz, an economist and chairman of the Policy Exchange of Bangladesh, says the AQR will not only help properly assess financial scenarios and the risks associated with it, but also promote transparency, accountability and the BB's close engagement in addressing the challenges.
"In fact, it will help establish better governance which will ultimately help regain confidence of the depositors. But this move should have been taken few months earlier," he added.
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