The Dark Side of Banking: Major Scams and Irregularities in Bangladesh’s Financial Sector

Bangladesh’s banking sector has been plagued by a series of scams, irregularities, and heists over the years. These incidents have led to significant financial losses for banks and have eroded trust among depositors. In this article, we will discuss some of the major scandals that have rocked the country’s banking industry.

Major Scams and Irregularities

Embezzlement and Money Laundering Cases

BASIC Bank embezzlement: In 2009-2013, BASIC Bank suffered a massive loss of BDT 4,500 crores through fake companies and dubious accounts.
Sonali Bank embezzlement: Hall Mark and some other businesses embezzled BDT 3,547 crores from Sonali Bank between 2010-2012.
Janata Bank fraudulence: Crescent and AnonTex were involved in a massive fraud involving BDT 10,000 crores between 2010-2015 & 2013 to present.
Embezzlement by Bismillah Group: The group embezzled and laundered BDT 1,174.46 crore through several banks between June 2011-July 2012.
AB Bank money laundering: AB Bank was involved in money laundering worth BDT 165 crores between 2013-2014.

Loan Disbursal Irregularities

NRB Commercial Bank gross irregularities: NRB Commercial Bank disbursed loans worth BDT 701 crores between 2013-2016.
Janata Bank loan scam: Janata Bank was involved in a loan scam worth BDT 1,230 crores between 2013-16.
Farmers Bank fund embezzlement: Eleven companies including NARCL and some other entities embezzled funds from Farmers Bank between 2010-2015.

The Problem of Default Culture

The default culture in Bangladesh’s banking sector is a major problem that requires a national-level policy to address it. The government should deploy more judges in the Artho Rin Adalot and expand legal proceedings at the district level to recover from defaulters.

Circulars Issued by Bangladesh Bank

Bangladesh Bank has issued several circulars to develop and standardize risk management capacity in the banking sector of Bangladesh. Some of these circulars include:

DOS Circular No.04 dated: 08.10.2018: Risk Management Guidelines for Banks
BRPD Circular No. 01 dated: 01.03.2016: Revised Guidelines on Foreign Exchange Risk Management for Banks
BRPD Circular No. 02 dated: 07.03.2016: Asset-Liability Guidelines (Revised)
BRPD Circular No. 03 dated: 08.03.2016: Revised Guidelines on Internal Control & Compliance Risk Management in Banks
BRPD Circular No. 04 dated: 08.03.2016: Guidelines on Credit Risk Management in Banks
Money Laundering & Terrorist Financing Risk Management Guidelines issued by Bangladesh Bank in September, 2015

These circulars aim to develop and standardize risk management capacity in the banking sector of Bangladesh.