S Alam alone has destroyed entire banking sector: Mashrur Arefin

Mashrur Arefin, managing director of City Bank, has said that S Alam alone has destroyed the entire banking sector. “Just as a single individual can ruin a bank, one or two honest directors can be enough to ensure the success of a bank,” he remarked.

He made these comments on Sunday (September 21) during a panel discussion titled “Banking Sector Crisis, Reforms and Regulation” held at Nabab Nawab Ali Chowdhury Senate Bhaban, University of Dhaka.

According to Arefin, the country’s banking sector holds total loans worth Tk 18 trillion, of which nearly Tk 11 trillion are problematic. Out of 60 banks in the country, 50 are local, and of these, around 40 are substandard while nearly 15 are “zombie banks” suffering from rampant looting.

Mahmood Osman Imam, Dean of the Faculty of Business Studies at the University of Dhaka, said during the discussion: “Reforming the banking sector is complex and costly. In zombie banks, the default loan rate is above 90 per cent. Bangladesh Bank must be given effective independence to drive reforms. In the draft Bank Companies Act, there is a proposal to limit the maximum number of directors from a single family to two, and to restrict directors’ tenure to six years. This will enhance transparency and accountability.”

The panel also featured Pubali Bank’s Managing Director Mohammad Ali and Bank Asia’s Managing Director Sohail R K Hussain. They observed that defaulted loans are rising rapidly, deepening the liquidity crisis of banks.

Sohail R K Hussain further noted: “Alongside independent directors and management, the central bank’s whistleblowing policy must be strengthened. Accountability of rating agencies and the Anti-Corruption Commission is essential. The central bank must also exercise direct and effective oversight over state-owned banks.”