Md. Shah Alam was the head of the Department of Financial Institutions and Markets (DFIM)
The Bangladesh Bank headquarters over in the capital’s Motijheel on Thursday cast a pall of embarrassment. And the reason being, just the previous day, one of the executive directors’ name came up in the case of defrauding a host of non-bank financial institutions of at least Tk 3,500 crore by rogue banker Proshanta Kumar Halder.
Md. Shah Alam was the head of the Department of Financial Institutions and Markets (DFIM), the branch of the central bank responsible for keeping watch on the NBFIs.
But he had allegedly teamed up Halder such that all the irregularities and corruption that the latter was indulging in flew under the radar of the regulator.
Alam’s involvement came to the surface after Rashedul Haque, a close aide of Halder and also a former managing director of the International Leasing and Financial Services (ILFSL), one of the NBFIs from where a large sum was siphoned off, made a confessional statement before a Dhaka court on February 2.
On January 24, the Anti-Corruption Commission (ACC) arrested Haque, an accused in five cases of fraud connected to ILFSL.
Alam and the BB former deputy governor SK Sur Chowdhury were on the payroll of Halder, both of whom helped to hide the irregularities and corruption at ILFSL, Peoples’ Leasing and Financial Services, Reliance Finance and FAS Finance and Investment, as per Haque’s confessional statement.
Last month, the High Court imposed a travel ban on Chowdhury, who has no connections with the BB after his tenure as an adviser had ended last year.
The correspondent yesterday spoke with more than a dozen officials of the central bank, all of whom expressed disgust and surprise over the conduct of the two, particularly Alam.
“He tainted us all,” said one of the high-ranking officials on condition of anonymity due to the sensitivity of the matter.
Haque’s confessional statement has left the central bank scandalised, said another official.
“They have created a shameful situation for us all,” he added.
All the BB officials must be held accountable for maintaining the institutional discipline, they said.
It was during Alam’s tenure as the chief of the DFIM since December 2017 that the health of about one-third of the 33 NBFIs has gone south.
Subsequently, the central bank yesterday removed Alam from the department, where he has been since October 2013, first as the general manager and then as its head.
BB ED Mohd. Humayun Kabir has been appointed in his place.
Alam, who joined the central bank as an assistant director in 1988 after acquiring his Masters degree in economics from Chittagong University, will be dispatched to another department, most definitely to an inconsequential one.
Contacted, BB Spokesperson Md. Serajul Islam said the central bank will investigate the charges of irregularities and corruption against Alam.
Action will be taken as per the BB staff law after completing the investigation.
For now, he has been removed from the DFIM, said Islam, also an ED of BB.
“It is very shameful when the officials of the central bank are involved in corruption,” said Salehuddin Ahmed, a former BB governor.
The BB should have increased its surveillance over these officials earlier.
“The NBFI sector is in a dire situation because of these corrupt officials,” he added.
The financial health of at least 10 NBFIs including ILFSL, Bangladesh Industrial Finance Company, Fareast Finance & Investment, Reliance Finance, Prime Finance and Investment, and FAS Finance & Investment is precarious, as per the BB data.
The default loans at the NBFIs soared 15 per cent to Tk 10,244.7 crore at the end of September last year.
The lack of proper supervision and monitoring by the central bank is responsible for the bad performance of the NBFIs, Khondokar Ibrahim Khaled, a former deputy governor of the BB, earlier told Dhaka Tribune.
The law states what to do if an NBFI goes bad, but the central bank is not following the law. As a result, several NBFIs went from bad to worse.
“Had the BB followed the law, PK Halder would not have been able to leave the country,” he added.
Halder is currently in Canada, where he is believed to have laundered more than Tk 10,000 crore to.
Last month, Interpol issued a red notice against Halder upon request from the Bangladesh government.
Alam could not be reached for comment.