Islami Bank, the largest and most profitable bank in the country, plunged into an internal struggle in just five months of wholesale restructuring of the board of directors and senior management.
The dispute arises from loan irregularities, lower dividend declaration and interference from a Chittagong-based business group in the bank's board business.
On May 20, a group of seven administrators threatened to resign if one of them had to resign under pressure.
They made the threat following disclosure by Syed Ahsanul Alam, vice president of the Islamic bank and an independent director, on May 11 that he was bothered by some resignations to resign.
Some of the 19 directors were also furious that the bank declared a 10% dividend on April 2 for 2016 against a net profit of Tk 450 crore.
They believe the board of directors announced the "low dividend" to see the bank 's share price on a "free fall" so that a group of large based companies In Chittagong to buy the shares at a low price.
On March 22, each share of the Islami bank was traded around Tk 45. A month later, the share price fell 30 percent to Tk 31.
The business group allegedly bought shares of the bank on behalf of seven companies registered with corporations last year.
Currently, the seven companies hold 14.02 per cent shares in the bank and have seven board directors, including President Arastoo Khan, a retired bureaucrat.
Arastoo's board of directors, formed after a major shakeup in key positions in January, disbursed loans of over £ 1,400 in just three months. Many loans have been approved without maintaining appropriate rules and regulations, according to a report from the Bank of Bangladesh.
In the midst of this situation, Islami Bank is expected to hold its annual general meeting today at the Kurmitola Golf Club in the capital.
One of Tk's 132.60 crore borrowings approved by the new board was for Infinit CR Strips Industries, a new company formed in February this year.
The loan proposal comes from the Khatunganj branch of Chittagong and the client is a sister concern of Armada Spinning Mills, one of the companies related to the "controversial business group", according to A director of the bank.
Arastoo represents Armada Spinning Mills, a new company that holds more than 2% stake in Islami bank.
The Infiniti loan proposal, which was for the construction of a steel manufacturing plant, did not include information on the customer's banking activities, said BB report.
In another case of irregularity, the board in a recent meeting increased the loan limit for Sister Denim Composite, a subsidiary of Thermax Group, from Tk 135 crore to about Tk 200 crore. The loan was granted in violation of the rule of classification of investment risks of the central bank.
The bank's board also granted loans of over Tk 800 crore for six companies of the Nassa group without taking the required guarantees, according to the report of the central bank.
The group provided guarantees worth Tk 268.63 crore against the required amount of Tk 338.59 crore.
In addition, loans were granted without credit ratings: some of Nassa's subsidiaries are defaults, but the issue was overlooked when the loans were approved.
The president of the Nassa Nazrul Islam Majumder group is also the president of the Bangladesh Bank Association, a forum for the bank's administrators.
In addition, some 150 employees were recruited without advertising for positions in another act of professional misconduct by the new board. Of the new recruits, 34 were for the bank's sensitive IT department, officials said.
Islami Bank was founded in 1983 with nearly 70 percent of its sponsorship from the Middle East countries.
Since its creation, it has tripled every five years. He has more than one creator of crore and manages about 30 percent of Bangladesh's remittances.
The bank financed nearly one textile factory and garment out of four in the country.