Governance Crisis Deepens at Pubali Bank

Pubali Bank Limited, one of Bangladesh’s oldest and most recognisable private banks listed on the stock market, is facing a profound and multi-layered crisis of corporate governance. Prolonged power struggles within its board of directors, persistent disregard for court verdicts and regulatory directives, and a series of irregularities in foreign exchange transactions and loan disbursement have collectively cast serious doubts over the bank’s transparency, accountability, and institutional integrity. Although multiple document-based investigations have revealed evidence of grave misconduct and regulatory breaches, the absence of decisive punitive action has allowed the situation to deteriorate further, fuelling growing concern among regulators, investors, and the wider banking community.

An interim investigation conducted by Bangladesh Bank’s Financial Integrity and Customer Services Department (FICSD) has exposed alarming practices in several branches of Pubali Bank. According to the findings, multiple branches charged importers significantly higher rates than the officially prevailing market rate when settling import letters of credit (LCs). Under existing regulations, any excess amount collected during such transactions is required to be credited to the bank’s own income account. Instead, in clear violation of banking laws and foreign exchange control regulations, these funds were directly transferred to the accounts of selected customers.

One particularly striking case emerged from the bank’s Barishal Bazar Road branch. In January 2024, a company named Mohammadi Electric Wire and Multi Products Limited opened an import LC worth USD 223,000. At the time of settlement, the bank charged approximately BDT 6.5 more per US dollar than the prevailing market rate. This resulted in an excess collection of around BDT 1.45 million. Rather than being deposited into Pubali Bank’s revenue account, the amount was transferred on the same day to a current account held by Rifat Garments Limited at the bank’s Motijheel corporate branch.

The transaction has sparked intense controversy due to the identity of the beneficiary. Rifat Garments Limited is a subsidiary of the Ha-Meem Group, one of the country’s largest industrial conglomerates. Notably, Abdus Razzak Mondal, a representative of the Ha-Meem Group, serves as a powerful director on Pubali Bank’s board. This connection has strengthened allegations of conflict of interest, board-level influence, and abuse of power.

Similar irregularities were identified at the bank’s Sylhet branch. Investigators found that approximately BDT 880,000 in excess funds collected against four import LCs opened by Messrs Hasan and Brothers were transferred to the same Rifat Garments account using an identical method.

The FICSD report notes consistent evidence of excess charges ranging from BDT 6.5 to BDT 8 per US dollar across multiple transactions. Analysts argue that such sustained irregularities could not have continued without weak internal controls, ineffective board oversight, and possible collusion at senior management level.