BB appoints observer at Standard Bank

Bangladesh Bank (BB) has appointed an observer at the Shariah-based Standard Bank to closely monitor its operations amid alleged internal conflicts between board members.

The central bank appointed Md Sharafat Ullah Khan, director of the Payment Systems Department, as an observer last week, according to BB Executive Director and spokesperson Arif Hossain Khan.

“We have taken this move in view of the current situation at the bank,” he said.

From now on, Md Sharafat Ullah Khan will attend board meetings and other vital meetings at Standard Bank as part of the BB's enhanced supervision.

Following 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.

Speaking on the condition of anonymity, bank officials said the feud has paralysed decision-making, with board meetings often ending in arguments over staffing and management matters.

Standard Bank began operations on 3 June 1999. In January 2021, it became a full-fledged Shariah-based Islamic bank after receiving approval from Bangladesh Bank.

Kazi Akram Uddin Ahmed, a businessperson and relative of deposed Prime Minister Sheikh Hasina, served as the chairman of the bank for years. However, following the political shift, Mohammed Abdul Aziz assumed the role.

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 per cent of its total disbursed loans. During the same period in 2024, its classified loans amounted to Tk 1,679 crore, or 8.62 per cent of total disbursed loans.