A patriarch in banking domain brings doom thru excesses

A self-imposed patriarch in banking made normal operations of the private-sector banks in Bangladesh difficult during ousted prime minister Sheikh Hasina's rule through excesses like forced donation and money-market distortions, bankers say.
Bankers say Nazrul Islam Mazumder's reign was marked by myriad allegations of power abuse since 2009.
He had allegedly forced banks to offer donations to Sheikh Hasina, the deposed prime minister, on numerous occasions during his tenure as the chairman of Bangladesh Association of Banks (BAB), an apex forum of the country's sponsor-directors of private commercial banks.
Mr Mazumder played a key role in collecting such donations, either in cash or kind such as blankets, under the Corporate Social Responsibility (CSR) programmes.
A CSR fund is money that may be set aside by a corporation to finance development and social- welfare projects of bodies which are engaged in such activities.
Banks were allegedly also forced to donate for different types of programmes run in the name of the then prime minister and her family members.
It was also learned that the party activities of the then ruling Awami League were also conducted with the same funds arranged by this person whom his critics term scandalous power-abuser.
Data show that BAB collected around Tk 55 million from the private commercial banks (PCBs) to organise the 'controversial' Sheikh Hasina Inter-Bank Football Tournament 2024 for a second time.
The much-talked-about tournament was also organised using a handsome amount from CSR fund by Mr Mazumdar in 2023.
Besides, banks were required to donate to the Prime Minister's Relief Fund frequently in the name of various programmes such as different types of tournaments, like Sheikh Russell National Child and Adolescence Parishad and Sheikh Kamal Youth Games.
Talking to the FE, two senior executives of two different PCBs said the power-abuser not only pressured the banks to donate for arranging the football tournaments but also asked the managements of the banks to provide an extra month's salary to all the staffs of all PCBs (from the managing director to the peon and class-four employee) so that together they could indulge in festivity for successfully completing the tournaments.
It is also learned that, as the BAB chief, he later used to issue a letter in this regard.
The senior bankers also claim that most of the banks could not comply with CSR-spending requirements in education and health as the lion's share of the funds would go for the tournaments, PM's relief fund and other activities relating to the Awami League.
Talking to the FE, Anis A Khan, the former chairman of the Association of Bankers Bangladesh, a platform of banks' chief executives, said donation is regarded as shareholders' money which would not be expended 'frequently and forcibly'.
"Donation should be limited. It would be provided for the development of health, education and socio-economic sectors," the senior banker notes.
On queries, senior banker Mehmood Husain outright rejected such practice of imposing the process of using amounts from CSR funds. It's 'undemocratic'.
He thinks such types of activities have created a barrier for ensuring good governance in the country's banking system.
"The decisions on donations should be taken by maintaining a democratic process," says Mr Husain, who was the managing director (MD) and chief executive officer (CEO) of Bank Asia, NRB Bank and National Bank.
He also echoes views of other senior executives of the PCBs in saying that all banks, particularly the PCB ones, were forced to donate to the Prime Minister's Relief Fund, various football tournaments and the housing projects under the PM's Office.
"Donation is a kind of charity, but its true value is lost when it is forced or imposed," the senior banker explains.
"Such types of forced CSR spending eroded banks' profits that also affected the dividend earnings of shareholders."
The central bank is overseeing the overall CSR programmes, implemented by all the scheduled banks, with its Sustainable Finance Department, a senior official of the Bangladesh Bank told the FE.
"We will take the next course of action in line with the Sustainable Finance Department's report," the central banker said, without elaborating.
The over-obtrusive business tycoon, Mr Mazumder, who had led the BAB since 2008, was also one of the architects of imposing a cap on interest rate on both lending and deposit to provide benefits to businessmen who were particularly politically linked.
However, interest-rate caps had hampered the country's economy seriously through creating an obstacle in the way of market-based interest regime in the last couple of years, according to economists.
Earlier on June 20, 2018, the BAB, under the leadership of Mr Mazumder, first decided to bring down the interest rates on both lending and deposit to 9.0 per cent and 6.0 per cent respectively from July 01 of the same calendar year.
He has also played a key role in slashing Cash Reserve Requirement (CRR) of the banks by 1.0 percentage point to 5.50 per cent through arranging a tripartite meeting of the Ministry of Finance, Bangladesh Bank (BB) and the BAB at Sonargaon Hotel on April 01, 2018.
Meanwhile, Mr Mazumder, using his political influence, had managed to get waived the interest on loans amounting to nearly Tk 2.61 billion from the state-owned Janata Bank in 2021, bankers said.
The board of directors of the public bank in its 654th meeting approved the interest waiver for two companies of Nassa Group: Nassa Taipei Spinners and Nassa Spinners.
Earlier in 2008, Janata Bank had acquired the Tk 1.20- billion loans of the two Nassa companies from two other PCBs -Southeast Bank and Islami Bank.
As per the board meeting's minutes, the state-owned bank offered Nassa Taipei the facility subject to collecting over Tk 1.56 billion by August 31, 2021.
In June 2021, the Bangladesh Bank rejected the facility as Janata Bank had approved the waiver facility which the central bank termed 'violation of banking norms'.
It was learned that on political pressure, later, the central bank backtracked on the decision and approved the interest-waiver facility.
Mr Mazumder could not be reached over the phone for his say.

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