First such instance in the history of a state-owned bank
Janata Bank board to be dissolved over massive corruption
Graphics: Agamir Somoy
The Bangladesh Bank has taken steps to dissolve the board of directors and management committee of state-owned Janata Bank at the same time. This is the first time in the country’s history that the banking sector regulator has taken such a step to dissolve the board of a state-owned bank. The move comes after serious irregularities emerged at Janata Bank. As many as 75 percent of the bank’s loans have already turned into defaulted loans due to the irregularities. Now, information about even larger scale fraud has emerged. Signs of irregularities have been found at every level of the bank, from its head office to sub branches and both inside and outside the country.
The irregularities include embezzlement of remittance incentives, fake commissions on letters of credit, risky use of centrally automated machines, purchases of nonexistent laptops, misappropriation of hundreds of crores of taka through discrepancies in transactions in foreign accounts, withholding huge amounts of unclaimed money belonging to thousands of customers including Hallmark and waste of state funds through manipulation. The bank’s board of directors, management committee and relevant officials themselves kept the doors open for irregularities and corruption. The situation has become so complicated that strict action has been taken to dissolve the board after its responsibility for the irregularities was established.
A Bangladesh Bank inspection team began investigating irregularities at Janata Bank in June. After conducting investigations in several phases, the team prepared a report. The report revealed a severe picture of irregularities, fraud and corruption. Against this backdrop, Bangladesh Bank held several meetings with Janata Bank’s board of directors and management committee. The Janata Bank authorities failed to provide any reasonable explanation or appropriate response at the meetings. The governor then took the matter seriously and gave the board another 15 days to respond. But the bank again failed to provide a satisfactory response. As a result, the investigation team recommended dissolving the bank’s board of directors and management committee. However, the executive director and deputy governor of the relevant Bangladesh Bank department sent a letter to the bank last week asking it to take appropriate action. As of Wednesday evening, neither Janata Bank’s board of directors nor its management committee had been dissolved. Instead, the bank’s managing director said they had already responded to Bangladesh Bank’s questions. He said they would discuss the matter and provide a better response.
According to Janata Bank’s own information, its core banking software, or CBS, cannot automatically identify customer information for accounts that have been inoperative for more than 10 years. As a result, the bank authorities have failed to take steps to address the problem of identifying unclaimed deposits that have remained unclaimed for more than 10 years. Consequently, the problem of obtaining branch wise information on unclaimed deposits through the existing CBS remains unresolved. The Bangladesh Bank inspection report said that the absence of a facility in the bank’s CBS to identify unclaimed deposits creates opportunities for large scale fraud and money laundering. It has also become impossible to collect accurate information for the period from 2009 to 2025. This indicates a lack of efficiency in bank management and appears to have been deliberate.
According to the report, Janata Bank did not follow the rules requiring Bangladesh Bank to debit the bank’s FC Clearing Account at the maturity of the EDF or to create a liability in the customer’s name after encashing the Nostro Account, which is an account maintained by a Bangladeshi bank abroad, through the branch to make payment at the maturity of the letter of credit. Similarly, unsupported entries related to the EDF, or Export Development Fund, were not reconciled. As of June 30, $44.364 million out of $49.527653 million in unsupported EDF entries had been reconciled through an advice sent by the local office. The matter reflects the inefficiency and ineffectiveness of the bank’s management and board of directors.
Documents show that forced demand loans were not created on time against amounts debited from the Nostro Account of Janata Bhaban Corporate Branch. As the loans were not created on time, the bank did not create liabilities for amounts receivable from customers. The branch also failed to properly calculate interest income. The bank management did not appear to have taken sufficient steps to recover the amount receivable from Orion Oil and Shipping Limited from the Bangladesh Power Development Board, or BPDB. Based on a consent letter issued by BPDB, a special letter of credit was opened for imports on behalf of Orion Oil and Shipping Limited within the loan limit approved by the bank’s board of directors. The company’s bills were used to adjust the liability. The outstanding Tk 8,307 crore created in the customer’s Agro account has not yet been repaid. As a result, the Nostro debit liability of Tk 8,316 crore created in the customer’s account cannot be adjusted.
Janata Bank also lost the opportunity to collect around Tk 8,200 crore in interest because demand loans were not created on time in the names of companies belonging to the Beximco Group. Similarly, the bank lost the opportunity to collect around Tk 470 crore in interest because demand loans were not created on time in the name of Orion Oil and Shipping Limited. In total, around Tk 8,270 crore in interest was not collected because proper banking procedures were not followed.
Documents show that classified loans worth 41.48 million UAE dirhams are held at two Janata Bank branches in the United Arab Emirates. The liabilities of those individuals and institutions amounted to Tk 4.39 crore in Bangladeshi currency. Among the loans, a long-term amount of 142.88 million, equivalent to Tk 304 crore, has been written off in the names of the Sheikh Khalifa Fund, Metropolitan Enterprise and Sheikh Khalifa bin Zayed Al Nahyan as finance margins. The matter is concerning.
A Bangladesh Bank inspection found that according to information provided by the bank’s Treasury Department, as of October 1, 2025, 488 accounts at 58 branches of the bank held Tk 94 crore in unclaimed deposits that had remained unclaimed for 10 years or more. The statement did not include information from many branches including the bank’s local office.
At Janata Bank UAE’s head office, actual spending in various sectors was significantly higher than the maximum permitted expenditure limits. At the office of the chief executive, six laptops were purchased from Liberty Computers LLC on May 27, 2020, for 21,892 dirhams. However, none of the laptops could be found. At Janata Bank’s chief executive officer’s office in the country, three Indian citizens were appointed among 12 officials without approval.
According to the report, Janata Exchange Company is located in Rome, Italy. Its head office and Rome branch had previously been located in the same area. However, the two offices were separated in 2017 without any understandable reason. Meanwhile, foreign remittances sent from Janata Exchange Company SRL in Italy were paid in advance from the Sondry Account, under the Advance Payment to Transfer category, of Janata Bank’s Dilkusha Corporate Branch.
Janata Bank Managing Director Md. Mojibor Rahman also acknowledged the issues of inefficiency and errors. He told Agamir Somoy, “Everyone knows about Bangladesh Bank’s action. We have given our response. Discussions have been held with officials of the relevant departments regarding the objections. A better response will be given later. As for around Tk 80 crore in unclaimed money belonging to Hallmark, it cannot be returned because a case is pending in court. It will be adjusted once a court order is issued. As for the irregularities mentioned in the Nostro Account, they occurred due to a system error. This will be fixed in the future. However, running a bank this way involves risks.”
In response to a question, he said, “Capital has been increased in the United Arab Emirates. We have been asked to ensure an amount equivalent to 2 billion dirhams as the mother bank. The Ministry of Finance has agreed to this. We are focusing on recovering defaulted loans. We are trying to increase recovery through the exit policy.”
Bangladesh Bank spokesperson and Executive Director Arif Hossain Khan said, “Bangladesh Bank is always against irregularities. Whether they occurred before or after the July 2024 mass uprising. If irregularities occur abroad, they will not be allowed to go unpunished either. Everything will be done in accordance with the law. No offender should escape punishment. Bangladesh Bank does not look at the identity of any offender.”
