Some senior officials of Al-Arafah Islami Bank allegedly embezzled Tk109 crore in agent commissions by disguising corporate deposits as grassroots agent collections, according to a Bangladesh Bank inspection report.
The probe, conducted in January 2025 at the bank鈥檚 head office, exposed a scheme involving the agent banking division, treasury, financial administration department and senior executives.
Inspectors concluded that entrenched syndicates and management complicity allowed the fraud to persist for nearly a decade, causing fund diversion, financial losses and tax evasion.
When contacted, bank鈥檚 chairman Khwaja Shahriar and managing director Forman R Chowdhury did not respond to calls and messages.
CFO Nadim Muhammad told 抖阴精品 that there was a misunderstanding about the allegations.
He said that there were no clear Bangladesh Bank instructions regarding corporate deposits.
He claimed that some officials had mobilised such funds since 2015 for the bank鈥檚 interest with approval from agent banking management, sometimes receiving commissions.
He denied direct involvement and noted that he was not named in the bank鈥檚 external audit reports.
In April, Al-Arafah sent eight officials, including Forman, Nadim and treasury head Abdul Mobin on forced leave to investigate irregularities at the bank.
Al-Arafah introduced agent banking in 2015 to provide low-cost financial services and mobilise small deposits from rural and marginalised communities.
By 2024, the bank reported paying Tk 361.11 crore in commissions to agents at rates of 1.5鈥�3 per cent, approved and disbursed through the FAD.
But inspectors found that most commissions were not based on genuine grassroots deposits. Large corporate deposits, collected by bank officers, were disguised as agent deposits to generate illegitimate payments.
In total, Tk 109.21 crore in commissions went to outlets controlled by or linked to bank officials.
The central bank noted that agent banking was meant for small-scale transactions capped at Tk 10鈥�15 lakh for low-income clients.
Instead, Al-Arafah routed corporate deposits through agents, offering interest rates of 12鈥�13 per cent and layering them with extra commissions.
The bank also failed to deduct and remit 10 per cent tax on these payments, depriving the exchequer of Tk 36.11 crore between 2015 and 2024.
In one case, Asadur Rahman, a then relationship manager and assistant vice-president of the bank, collected Tk 23 crore in deposits from the Civil Aviation Welfare Fund, which was falsely shown as mobilised through the Atipara agent outlet, where inflated commissions were paid.
His personal phone number was found in the fund鈥檚 accounts. The phone number also found to be used in several other corporate deposits under agent banking, later deleted to hide tracks.
Many deposits distributed across outlets in Dhaka, Brahmanbaria and Barishal were controlled by bank staff.
Asadur resigned from the bank, though his resignation was not accepted due to the ongoing inquiry.
Another key officer, Shahidul Hossain, senior principal officer of the agent banking division, was the beneficial owner of Molla Enterprise, an outlet through which corporate deposits were routed.
From its account, No. 9901020003995, Tk 21 lakh was transferred to Shahidul鈥檚 personal account in June 2023 and withdrawn in cash.
Investigators also flagged suspicious transactions involving his wife, Murshida Akter, and sister.
Corporate deposits collected by Asadur were sent through Molla Enterprise into accounts of Setu Enterprise, Kazi Enterprise, Muntaha Enterprise, Nazir Ahmed Enterprise and Talha Enterprise, all linked to his family.
Former senior assistant vice-president Shakhawat Hossain received large transfers into his accounts between 2022 and 2024 through the same network.
In May 2024, Tk 50 lakh was moved from an Al-Arafah agent account, Azhar Traders, into Muntaha Enterprise鈥檚 account at Standard Bank.
The money was withdrawn and re-deposited into an account under the name of Tahmina Akter, wife of former deputy managing director and long-time head of agent banking, Abed Ahmed Khan.
Inspectors concluded Abed Ahmed was the beneficial owner.
In 2024 alone, Tk 2 crore was deposited and withdrawn from this account, while he maintained over 100 deposit accounts in his and his family鈥檚 names.
At the financial administration level, CFO and FAD head Mohammad Nadim bypassed rules to approve inflated deposit rates.
While the managing director authorised 11.25鈥�12.75 per cent in some cases, Nadim routinely granted up to 13 per cent using ICT requisition slips, despite lacking authority.
To cover costs, he arranged 鈥榗ommission sharing鈥� payments of 1.25 per cent to certain branches.
The scheme drained Tk 285.25 crore from the bank 鈥� Tk 186.75 crore in excess interest to corporate depositors and Tk 109.21 crore in inflated commissions.
Inspectors said that this was carried out with knowledge of the FAD, treasury and senior management.
They also exposed how executives concealed income and evaded taxes using General Ledger accounts.
Managing director Forman R Chowdhury maintained multiple fixed deposit receipts, routing funds through GL head 1032204008 and later withdrawing in cash.
CFO Nadim reportedly operated at least 67 FDRs the same way. Inspectors called this deliberate concealment to evade tax filings.
Other officials, including FAD officer Monowar Hossain, were also implicated, pointing to a culture of systemic malpractice.
Forman Chowdhury and Nadim also received Tk 51.9 lakh and 1.9 lakh in the name of additional incentive bonus, violating banking rules.
The probe also noted that officers in key departments had been stationed for 5 to 20 years, creating syndicates that sustained malpractice.