In violation of the Bank Company Act, the Sikder family has held six director positions on the board of National Bank Limited (NBL) for the last five years. During this time, they have allegedly abused their dominance to approve loans and the number of non-performing loans jumped sharply.
According to the latest annual report of the bank, the six directors from the Sikder family are Zainul Haque Sikder, chairman of Sikder Group, his wife Monowara Sikder, daughter Parveen Haque Sikder, sons Rick Haque Sikder and Ron Haque Sikder, and nephew Jonas Sikder Khan. They all have held director positions since 2015.
The group came into the spotlight following an altercation with Exim Bank over the sanction of a Tk500 crore loan. After the loan was not sanctioned, Rick Haque Sikder and Ron Haque Sikder reportedly shot the MD of Exim Bank and tortured two other officers.
The Bank Company (amendment) Act 2013 allows no more than four members of a family on the board of a bank. Prior to the amendment, the upper limit was two.
A first generation bank in Bangladesh, and once a top performer in the country, NBL is now an ailing and undisciplined organization. The top management of the bank is powerless against the will of the Sikder Group due to their supremacy on the board, sources said.
Non-performing loans at the bank soared to Tk2,776 crore in December last year.
Bankers and economists say that violation of laws and the Sikder family’s supremacy on the board has led the bank into trouble, risking the money of depositors.
Speaking to Dhaka Tribune, former deputy governor of Bangladesh Bank, Khondkar Ibrahim Khaled, said the group under the auspices of the government, has repeatedly broken the law. However, the Finance Ministry and Bangladesh Bank remained silent.
"Even a few years ago, National Bank was one of the top five banks. After Sikder took the lead in the board with six members of the family, the performance of the bank started to deteriorate and the downward trend continues,” said the former banker.
Ibrahim Khaled also blamed political influence for the irregularities and corruption in the bank. As Sikder Group maintains a good relationship with influential political leaders, the central bank and the finance division are not taking action against NBL, he said.
Although the bank has been violating rules for years, the central bank claims it did not know about it.
"I am not well informed about the directors. We will investigate and if there are violations of rules, legal action will be taken against the bank,” Bangladesh Bank spokesman and Executive Director Sirajul Islam told Dhaka Tribune.
“We are ready to enforce the rules,” he added.
Contacted, Director and Chairperson of the Executive Committee of NBL, Parveen Haque Sikder, declined to comment on the matter.
“There is no one among the top management, including the MD, who can raise their voice against the decisions of the Sikder Group. Decisions on the approval of loans depends on their will, which has caused the high number of bad loans at the bank,” a top NBL official told Dhaka Tribune, asking to remain anonymous.
Due to the non-performing loans and mismanagement, shareholders of the bank are being deprived of good returns on their investment. The trend of offering dividends is declining, the official said.
Executive Director of Policy Research Institute (PRI), Dr Ahsan H Mansur, told Dhaka Tribune: “If more than two members on the board of any bank are from the same family, investor and general shareholder interests are not protected.
“However, the bank company act stipulates that a maximum of four family members are allowed on a bank's board, which is irrational. If there are more than four family members, it is even more irrational,” he added.
“People should not keep money in such banks,” Mansur suggested.
The bank disbursed only 10% stock dividends to its shareholders in 2018, as compared to 55% in 2009, 95% in 2010, 65% in 2011, 20% in 2016 and 12% in 2017.
The consolidated earnings per share (EPS) of NBL was Tk0.65 for the third quarter (January-September) of 2019, and Tk0.82 over the same period in 2018, according to the unaudited report.
Meanwhile, the price of each share of the bank was at a face value of Tk7.20 on March 25 at the Dhaka Stock Exchange. NBL was listed on the Dhaka bourse in 1984.