Bangladesh Bank has given back control of Al-Arafah Islami Bank to its former owners. This decision came with support from top government leaders. Now, people once accused of wrongdoings are on the bank’s new board.
Soon after, two new directors had to leave the board. The Chattogram-based KDS Group now holds the main control of the bank. KDS Group has been involved with other banks like National Bank, alongside the S Alam Group.
The new board members have started trying to bring back former bank officials. These officials were earlier fired or accused of problems. Some even attended the first meeting of the new board. Also, reports say one of the bank’s Deputy Managing Directors resigned under pressure. This has made many bank employees worried.
Badiur Rahman, the new Chairman of Al-Arafah Islami Bank, said he will run the bank professionally. He promised to prevent new problems. Mr. Rahman stated that those fired for specific reasons will not get their jobs back. He added that his main duty is to protect money kept by depositors.
After a political change in August 2024, Bangladesh Bank removed the bank’s old board. It then formed an independent board of directors. During their time, audits by local and foreign firms found many problems in the bank.
When a new government took power in February, two groups tried to regain control of Al-Arafah Islami Bank. KDS Group asked for its ownership rights back. Another group asked for board seats based on their shares.
The government then told Bangladesh Bank to return control to shareholders with at least a two percent stake. The five independent directors remained on the board. Bangladesh Bank appointed 14 directors from shareholders. Six of these are from the KDS Group or are close relatives. They include KDS Group Chairman Khalilur Rahman and his son Selim Rahman. Chairman Badiur Rahman is also connected to the KDS family.
However, the Bank Company Act says only three directors from one family or business group can serve on a bank’s board. So, two KDS representatives could not take their places. Bangladesh Bank then appointed a new director.
An official from Bangladesh Bank, who did not want to be named, said they were forced to give control back to a specific group. This was due to pressure from the highest levels of the government.
Past audits showed that two former chairmen wrongly bought luxury cars for themselves. These cars cost 55 million Taka. One of them was Selim Rahman of KDS Group, now the executive committee chairman. The other was Abdus Samad Labu, brother of S Alam. The bank paid for these cars from special bank accounts. The cars were not registered to the bank to hide the dealings.
Khalilur Rahman, KDS Group Chairman, was also chairman of National Bank earlier. He faced many cases for wrongdoings and was arrested by the Anti-Corruption Commission. He also spent time in jail. He is now a director of Al-Arafah Islami Bank.
Al-Arafah Islami Bank held deposits of 543.65 billion Taka by December last year. It had lent out 501.21 billion Taka. Bad loans made up 17.61 percent of all loans. The bank made a profit of 850 million Taka last year. But due to many bad loans, it did not give any profit share to its owners in 2024 and 2025. It is now in the Z category on the stock market.
Mustafa K Mujeri, a former chief economist of Bangladesh Bank, said it is normal for owners who are directors to run banks. But he added that people have seen what many of them did before. He said it is wrong to put people in charge again if they might cause problems for a bank. He urged Bangladesh Bank to check past records carefully and not be influenced by others.
