A prolonged boardroom power struggle, an unchanged board structure despite court rulings and regulatory directives, and the repeated resurfacing of foreign exchange and loan irregularities have together pushed Pubali Bank’s governance into serious question.
Although document-based probes have identified grave misconduct, stalled investigations and the absence of punitive action show how long-standing power imbalances at board level and weak oversight have combined to drive the country’s oldest private bank into a structural crisis.
At the centre of this crisis is a recurring pattern of irregularities in foreign exchange transactions and the settlement of import letters of credit – issues that regulators have repeatedly identified but failed to resolve decisively.
A partial probe by Bangladesh Bank’s Financial Integrity and Customer Services Department (FICSD) found that several branches of Pubali Bank charged amounts beyond declared market rates.
Instead of being credited to the bank’s own accounts, the excess sums were deposited into the account of another customer, a practice officials described as a clear violation of banking law and foreign exchange regulations. TIMES of Bangladesh obtained the probe report from the Banking Regulatory and Policy Department (BRPD) of Bangladesh Bank.
According to the uncompleted report prepared in mid-2025, Mohammadi Electric Wire and Multi Products Limited, a client of the bank’s Barishal Bazar Road branch, opened an import LC of about $223,000 in January 2024. When settling the LC liability, the bank charged around Tk6.5 more per dollar than the market rate. The excess – about Tk1.45 million – was deposited the same day into the account of Rifat Garments Limited, a client of the Motijheel corporate branch.
Rifat Garments – an entity of Ha-Meem Group – and its sister concern That’s It Fashions Ltd are major shareholders of Pubali Bank. That’s It Fashions’ representative Abdur Razzak Mondal serves as a director on the bank’s board.
Investigators found this was not an isolated transaction. The same pattern emerged in four import LCs opened by Messrs Hasan and Brothers at the Sylhet branch in the same year, where an additional Tk880,000 was collected beyond the declared dollar rate and credited to Rifat Garments’ current account.
The FICSD report noted that between Tk6.5 and Tk8 extra per dollar was charged across multiple branches and customers and in almost all cases the surplus funds ended up in Rifat Garments’ account.
When asked to explain these fund flows, Pubali Bank authorities told the probe team that the LC-opening firms had business dealings with Rifat Garments, according to central bank officials. However, when investigators sought VAT invoices or other documentation to substantiate lawful transactions, the bank failed to produce them.
Officials of the Bangladesh Financial Intelligence Unit (BFIU) said collecting money beyond declared rates and transferring it to a third-party account aligns with high-risk money-laundering structures, as no legitimate source or tax documentation for the funds could be identified. Officials of Bangladesh Bank’s Foreign Exchange Operation Department separately described the practice as a clear breach of foreign exchange regulations.
Investigators said they identified similar irregularities in about 50 LCs. Yet the FICSD inquiry was halted after analysing only five. The report prepared on the basis of this partial probe has remained pending at higher offices for more than six months, leaving the identified violations without any visible punitive response.
Foreign exchange irregularities of this kind are not new for Pubali Bank. An earlier Bangladesh Bank inspection report found that between August and November 2023, one branch bought dollars at rates above official levels, incurring excess expenditure of about Tk211 crore. During the same period, Tk5.28 crore from a government incentive fund was also wasted.
Bangladesh Bank inspectors warned that if such practices were found at one branch, inspections of other authorised dealer branches could reveal a far wider problem. That inquiry too went no further.
Concerns have also mounted over loan disbursement practices. Documents from the Anti-Corruption Commission (ACC) and BFIU show that large loans were extended to Rifat Garments, Creative Fashion, Karim Group, Bandar Steel, Haque Group, Ranu Agro, Tamim Agro and several other firms without adequate collateral. In some cases, the loan proceeds were used to repay liabilities at other banks, pointing to fund diversion and serious lapses in risk management.
It is against this pattern of lending irregularities that the ACC and BFIU have launched separate investigations. Based on written complaints from major shareholders, authorities are examining allegations that a group led by the chairman and managing director misused power and bank resources.
ACC investigator Hafizur Rahman told TIMES that the commission is currently probing three separate complaints against Pubali Bank. The allegations relate to irregularities in foreign exchange transactions, violations in recruitment practices, and irregularities in loans extended to 13 institutions.
Providing an update on the progress of the inquiry, he said the investigation has already confirmed that excess dollar pricing resulted in funds being credited to a specific customer’s account, while inquiries into the remaining allegations are still ongoing. The commission, he added, is examining whether these practices involved broader breaches of banking and regulatory rules.
“As part of the probe, we have collected documents related to 70 recruitments, along with loan-related records,” Rahman said, noting that the evidence gathered so far is being analysed as the investigation continues.
Alongside these investigations, controversy has also emerged over the reappointment of Pubali Bank’s managing director Mohammad Ali. Under a recent regulatory circular, a minimum of 20 years’ experience in banking is required to serve as managing director of a commercial bank, while Ali’s professional experience stands at 16 years.
The regulator, however, says the rule is not intended to operate retrospectively. Bangladesh Bank spokesperson Arief Hossain Khan told TIMES that appointments made before the introduction of the new policy would not automatically be subject to the 20-year threshold.
“In cases where incumbent managing directors have not yet completed 20 years of experience, reappointments will be considered on an exceptional basis,” he said.
TIMES repeatedly tried to reach Pubali Bank’s managing director and CEO Mohammad Ali by phone and text messages for comment on the bank’s crisis and alleged irregularities, but received no response by the time of filing this report.
Prolonged power struggle within board
The conflict within Pubali Bank’s board reflects a prolonged struggle for control in which court rulings, regulatory interventions and a Delta Life Insurance-centred power network have become intertwined.
Since 2008, the chairmanship and effective control have remained concentrated among representatives linked to Delta Life Insurance and its allied institutional network, shaping decision-making and weakening oversight.
Bank records show that from 2008 until April 2016, the board was chaired by Awami League MP Hafiz Ahmed Majumdar, who served as Delta Life Insurance’s representative. Although chairmen have changed over time, the centre of control has not.
In 2020, Monzurur Rahman – also representing Delta Life Insurance – assumed the chairmanship and has remained in the position since then. Following Rahman’s appointment, Majumdar has continued as chairman of Delta Life Insurance.
A section of major shareholders has long challenged this concentration of power, alleging systematic exclusion from board representation. In 2013–14, a legal crisis emerged when Pubali Bank’s election commission declared eight directors, including Majumdar, ineligible for failing to meet minimum shareholding requirements.
In February 2014, the High Court declared those posts vacant, a ruling later upheld on appeal, though the board structure remained largely unchanged.
Amid this uncertainty, controversy grew over AGMs and director re-elections, with allegations that meetings were held during pending cases and when many expatriate shareholders were absent, allowing proxy voting to entrench control, according to ACC records.
Bangladesh Bank intervened in 2015, directing the removal of several directors, but the order was not implemented. Although the chairmanship briefly shifted in 2016, control reverted to a Delta Life Insurance representative in 2020.
Regulators warn that prolonged board dominance by a single power centre weakens accountability – concerns now sharpened by recurring irregularities and stalled oversight.
