Like other state-owned banks, Agrani Bank has experienced rampant irregularities and corruption over the last decade and a half. During this time, influential individuals extracted billions of BDT in loans, bypassing standard procedures. A significant portion of these loans has now turned into defaults. According to the bank’s data, as of September this year, 35 percent of its distributed loans had defaulted. The situation has since worsened, with nearly 40 percent of Agrani Bank’s loans now categorized as non-performing, according to insiders.
Agrani Bank’s records show that by September 30, its total distributed loans stood at BDT 756.77 billion. Out of this, BDT 268.92 billion, or 35.53 percent, was classified as defaulted. The bank also wrote off BDT 56.09 billion in bad loans during the same period. Additionally, Agrani Bank reported a capital shortfall exceeding BDT 46.06 billion by the end of September. By November, the amount of defaulted loans crossed BDT 300 billion, accounting for approximately 40 percent of the bank’s total distributed loans. Furthermore, the bank’s provision and capital shortfalls have reached critical levels, compelling Agrani Bank to borrow funds from the market to meet daily transactions. This is a stark contrast to its previous position as a lender to other banks.
After the student-led mass uprising, the government replaced Agrani Bank’s board and management. The newly appointed officials state that, on the surface, Agrani Bank has grown significantly over the past 15 years its balance sheet is showing assets exceeding BDT 1 trillion. However, they assert that the institution has been ‘hollowed out’ from within. A small group of influential clients, mainly affiliated with the ruling Awami League, dominate the bank and are not repaying their loans. Consequently, key indicators, including default loans, have deteriorated drastically.
After the interim government assumed office, Syed Abu Naser Bukhtear Ahmed was appointed as the chairman of Agrani Bank. He previously served as the bank’s managing director (MD) from 2004 to March 2010. Commenting on the bank’s current state, Bukhtear Ahmed told Bonik Barta, “The crisis at Agrani Bank is beyond imagination. After 2010, the bank was driven to the brink of collapse. Upon assuming the role of chairman, I discovered that nearly BDT 25 billion had been debited from the bank’s Nostro accounts (opened for foreign currency transactions), yet this amount was not deducted from the customers’ accounts. This sum had been overdue for 735 days. In my long banking career, I have never encountered such a massive fraud.”
He further added, “Over the last 15 years, only individuals affiliated with the Awami League have received loans from Agrani Bank. Many of these loans were disbursed through fraudulent means. These are now unrecoverable. Currently, the bank’s default loan rate is nearly 40 percent. When I left as MD in 2010, Agrani Bank’s default loans amounted to just BDT 21.02 billion or less than 10 percent of its total distributed loans. It was a well-performing bank at the time. Since taking over as chairman, I have been working to reduce default loans through cash recovery, rescheduling, and other legal measures.”
An analysis of Agrani Bank’s performance reveals that between 2010 and 2023, the bank’s assets more than tripled. And its business volume grew nearly fourfold. However, despite this expansion, the bank’s financial foundation has significantly weakened. At the end of 2010, Agrani Bank’s total assets stood at BDT 264.85 billion. By the end of 2023, this figure reached BDT 1.2395 trillion. It translates into a 365 percent growth in assets. Despite this growth, the bank’s profitability has declined. In 2010, the bank reported a net profit of BDT 3.51 billion. This figure dropped down to merely BDT 690 million last year. This reported profit was artificially inflated. By the end of 2023, Agrani Bank faced a provision shortfall of BDT 113.64 billion. As per regulations, banks with provision shortfalls are not permitted to show net profit. To bypass this restriction, Agrani Bank secured policy waivers from the central bank. The Bangladesh Bank has instructed the bank to gradually address this shortfall in the coming years. This waiver allowed Agrani Bank to report a net profit last year. Without it, the bank would have faced record losses. The weakening financial state is not limited to net profit; every key financial indicator of the bank has deteriorated during this period.
At the end of last year, Agrani Bank faced a capital shortfall of BDT 44.4 billion. According to central bank regulations, the bank’s capital adequacy ratio (CAR) against risk-weighted assets should be at least 12.5 percent. However, the bank’s CAR stood at only 4.57 percent. Even just a decade ago, Agrani Bank was significantly more self-reliant in terms of provisioning and capital reserves.
After the Awami League came to power in 2009, Dr. Khondoker Bazlul Hoque, a professor at Dhaka University, was appointed as the Chairman of Agrani Bank. He was a member of the Awami League’s Advisory Council and later became the Chairman of the party’s Environment Subcommittee. At the same time, former leaders of the Chhatra League were appointed as directors on the bank’s board. In March 2010, Syed Abdul Hamid was appointed as the Managing Director (MD). It was during this period that irregularities and corruption began to spread widely within the bank. Agrani Bank became embroiled in successive loan scandals.
In November 2014, economist Dr. Zaid Bakht was appointed as the Chairman of Agrani Bank by the government of Sheikh Hasina, replacing Dr. Khondoker Bazlul Hoque. Following direct involvement in a loan scam, Syed Abdul Hamid was removed from his position as Managing Director (MD) of Agrani Bank in June 2016. Subsequently, Md Shams-ul-Islam was appointed as MD of the bank. After serving two consecutive terms for six years, he retired in August 2022.
Agrani Bank officials claim that since 2010, the collusion between the board of directors and management led to widespread corruption, which eventually spread across all levels of the bank. The leadership of the former Managing Directors, Syed Abdul Hamid and Shams-ul-Islam, was at the center of this corruption. They allegedly took commissions at fixed rates from loans obtained by customers. A portion of these commissions was reportedly shared among the Chairman and other directors. Additionally, bribery was rampant in the procurement of software and other purchases for the bank, with hundreds of millions of taka involved in these corrupt transactions. Despite spending nearly BDT 5 billion on core banking software, the project ended in failure.
A review of major borrowers and loan disbursement data from Agrani Bank reveals that approximately 82 percent of the bank’s loans are concentrated among a small group of large borrowers. A total of 64 borrowers have received loans amounting to around BDT 620 billion. The list includes multiple companies belonging to the same families. Additionally, nearly 52 percent of the bank’s loans have been disbursed through just nine branches in the capital, with BDT 220 billion issued from the Principal Branch in Motijheel alone.
At the beginning of last month, Md Anwarul Islam was appointed as the Managing Director of Agrani Bank. When asked about the bank’s current situation, he told Bonik Barta, “The bank’s loans are primarily concentrated among a few large borrowers, many of whom have become defaulters. This has significantly increased the amount and rate of non-performing loans. We are working to reduce the default loan rate from 40 percent to around 30 percent by the end of December.”
Regarding identifying and penalizing bank officials involved in irregularities and corruption, Anwarul Islam said, “The Anti-Corruption Commission is regularly summoning officials involved in specific loans. We are also trying to identify the responsible individuals. I believe that officials connected to these crimes, whether current or former employees, will face justice.”