• Monday, Aug 10, 2020
  • Last Update : 05:39 pm

Why was Jamal Uddin removed from Janata?

  • Published at 09:30 pm July 30th, 2020
Jamaluddin Ahmed Janata Bank
Jamaluddin Ahmed Collected

The Ministry of Finance removed Jamal Uddin Ahmed from Janata Bank owing to his alleged exercise of influence in sanctioning loans in violation of banking rules

The state-owned Janata Bank ltd has long been a topic of unpleasant discussion in the banking sector, thanks to its ailing financial condition caused by a number of large scale loan scams, including those of Anon Tex and Crescent Group.  

To revive one of the largest public sector banks, the government in August last year appointed Jamal Uddin Ahmed as the chairman of Janata for a three-year term. But the finance ministry removed him on Tuesday before the expiry of his term.

Jamal was replaced by Dr SM Mahfuzur Rahman.

The Financial Institutions Division under the finance ministry announced the changes through a gazette notification.

A circular, signed by Jahid Hossain, Deputy Secretary of the Division, said Mahfuzur Rahman would carry out his responsibilities as chairman of Janata Bank for three years from the date of his joining.

Dr SM Mahfuzur Rahman is a former chairman of the Department of Banking at the University of Dhaka. He  has also served the Investment Corporation of Bangladesh as its chairman.

The Ministry of Finance removed Jamal Uddin Ahmed from Janata Bank owing to his alleged exercise of influence in sanctioning loans in violation of banking rules, said a high official of Janata Bank on condition of anonymity.  

Bangladesh Economics Association general secretary Jamal Uddin Ahmed used to interfere in almost all loan sanctioning processes and administrative affairs of the bank since joining as chairman, he also alleged.

However, the abrupt removal of Jamal from the bank and the quick appointment of a new chairman are seen as puzzling by senior bankers, as neither the ministry nor the Bangladesh Bank has come forward with any explanation for the change.

“In the interest of transparency, the government or the central bank should give an explanation over the removal. If the dismissal was caused for reasons of corruption and irregularities, mere removal is not an appropriate way to deal with the issue. He (Jamal) should be punished,” a top banker said.

“If trials for misconduct are not ensured, transparency in state-owned banks will never be established and scams will not be stopped,” he added. 

Earlier, there was quite some drama in the bank regarding the appointment of a former chairman. Hedayetullah Al Mamun, former senior secretary at the Finance Division under the Ministry of Finance, was appointed chairman of the bank. The appointment was later canceled. 

Instead of Hedayetullah, the government in March 2018 appointed Luna Shamsuddoha as chairman of the scam-hit Janata. She was the first woman to head any state-owned bank in Bangladesh.

Talking to Dhaka Tribune, former Janata Bank Chairman Jamal Uddin Ahmed said, “Both my appointment and dismissal were made by the government, and I have no say in the policy decisions.”

“All the allegations against me are false and baseless. I don't want to say anything on such unfounded allegations,” he added. 

As of March this year, Janata Bank’s total bad loans stood at Tk14,117 crore. The figure was Tk5,818 crore in 2017. 

Currently Janata Bank faces a capital shortfall of Tk2,563 crore, according to Bangladesh Bank data.

Bypassing banking rules, the bank lent above Tk10,000 crore to Anon Tex and Crescent Group, a Bangladesh Bank(BB) inspection report said. According to the report, Janata  had not complied with the central bank’s single borrower exposure limit criteria. Now almost the entire amount has turned into a default loan.

Janata Bank managing director Md. Abdus Salam Azad did not pick up the phone calls repeatedly made by  Dhaka Tribune for comments. Nor did he respond to text messages.

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