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Acknowledging the bank's capacity for a quick turnaround and finding no truth to certain serious allegations, Bangladesh Bank has—albeit belatedly—begun evaluating the sponsor directors of Al-Arafah Islami Bank (AIB PLC).
A meticulous analysis has been conducted regarding who played what role over the bank’s three-decade journey. A new board of directors has been formed, giving priority to those who kept themselves above all controversy and consistently contributed to taking the bank forward. Investigations also looked into who ran the board during various past government regimes and whether any director was subjected to deprivation.
No evidence of conflict or clashes driven by political motives was found within AIB PLC. Surprisingly, pious individuals of varying political views and opinions managed to run the bank collaboratively. This picture has emerged over the past two years through the investigation and audit reports of multiple regulatory bodies, including Bangladesh Bank.
Cleared of Allegations and Restored
Nearly two years ago, the interim government dissolved the AIB PLC board of directors due to the involvement of the S Alam Group. The board's responsibility was handed over to five independent directors nominated by Bangladesh Bank. At the time, it was suspected that the bank had been hollowed out from the inside due to massive looting.
However, investigations by multiple relevant agencies revealed a different picture. AIB PLC did not suffer massive deterioration in asset quality under the aggression of any influential or controversial group. No investment scams occurred through forgery or other unethical means. Even during severe crises, the bank did not fall into a liquidity crunch and remained capable of supplying customer funds of any amount.
Consequently, despite hundreds of adversities and risks, the bank was saved from disaster. According to relevant sources at Bangladesh Bank, after observing all aspects carefully, the central bank ultimately sought out the tested sponsors of the bank. The new board includes several of the founders who established this top-tier bank, brought it success through tireless hard work, and still possess the capability to guide it through difficult times. Bangladesh Bank may gradually appoint a few more qualified sponsor directors in the near future.
Of the 12 banks whose boards were dissolved at the start of the previous interim government due to various allegations, only AIB PLC's board was reconstituted on July 16. Regarding this, Bangladesh Bank Executive Director and Spokesperson Arif Hossain Khan stated, "Because the bank's financial condition has improved compared to before, it has been handed back to its former (tested) sponsors. For other banks whose boards were dissolved, their sponsors cannot be found. But the scenario for Al-Arafah Islami Bank is different, which is why it was returned to their hands."
Historical Context: The Turning Point of 2007
An observation of the critical indicators of Al-Arafah Islami Bank over its three-decade journey since its establishment in 1995 shows that the bank did not achieve its desired success in the first 12 years. In 2007, classified investments multiplied exponentially, revealing a grim picture of management failures.
To pull the bank out of this deep crisis, the 1/11 government took action, and Bangladesh Bank appointed an observer. At that time, the tested sponsor directors also took steps to overhaul the board. To manage that difficult situation, everyone unanimously elected Badiur Rahman as Chairman of the Board of Directors, based on his competence. Abdus Samad Sheikh was in charge as the Managing Director. It was this MD-Chairman duo that essentially began the work of laying a solid new foundation for AIB PLC.
An Era of Phenomenal Growth (2008–2016)
Speaking on the condition of anonymity, a former managing director of the bank said that during Badiur Rahman's 8-year tenure as Chairman from 2008 to 2016, AIB PLC had three dynamic managing directors. The second MD to work alongside Badiur Rahman was Ekramul Hoque, and their partnership achieved outstanding success in driving the bank toward prosperity. The final successful MD during that era was Md. Habibur Rahman. Under the guidance of the Badiur-Habibur duo, the bank set a unique precedent for business expansion and prosperity.
Badiur Rahman’s 8-year tenure of positive growth stands as the most critical period in the bank's 30-year journey. In 2007, the bank's profit growth was at a negative 22 percent. By 2009, profit growth experienced a surprising turnaround, reaching a positive 13 percent, and further peaking at 34 percent in 2011. By the end of Badiur Rahman's tenure in 2016, profit growth stood at 18 percent. Over these 8 years, deposits increased nearly sevenfold, growing from 2,969 crore BDT to 19,970 crore BDT. During the same period, investments saw a massive expansion, rising from 2,972 crore BDT to 19,651 crore BDT. The import business experienced a significant increase, climbing from 3,268 crore BDT to 11,878 crore BDT, while the export business grew more than fourfold from 2,017 crore BDT to 8,815 crore BDT. Additionally, the number of bank branches almost tripled, expanding from 50 to 140 branches.
The New Leadership of 2026
Sources report that the decision to restructure the bank's governance framework was made following various audits, inspections, and reviews conducted by Bangladesh Bank, KPMG, and other relevant authorities. Ten years later, in 2026, during yet another challenging period, tested sponsor director Badiur Rahman has once again been elected as Chairman of the Board.
Similarly, Salim Rahman—who successfully served two terms as board chairman—has been made the Chairman of the Executive Committee (EC). He has previously left his mark of success as the Managing Director of KDS Group and the first Vice President of BGMEA.
Other founding sponsor directors returning to the current board include Nazmul Ahsan Khaled, Hafez Md. Enayet Ullah, Anwar Hossain (Son of Muhammad Harun), Mohammed Abdus Salam (Son of Mir Ahmed Sowdagar), Md. Rafiqul Islam (Son of Badsha Mia), and Alhaj Imadur Rahman (Son of Muhammad Mahtabur Rahman).
Following his election as a new director, Md. Rafiqul Islam (son of founder Badsha Mia) remarked, "We are proud and hopeful to have KDS Group's head Khalilur Rahman on our board. Thirty years ago, at his call, my father and many established businessmen of the country invested in Al-Arafah Islami Bank. Since then, he has shielded this bank through all bad times. Following that legacy, the bank's journey to turn around anew has begun once again under Khalilur Rahman's guardianship in the face of this new challenge."
The S Alam Connection and Governance
Regarding the S Alam connection, a former director noted that Saiful Alam (S Alam) entered the banking sector 30 years ago specifically as a sponsor director of AIB PLC. However, from the very beginning, the directors prioritized good governance and professional leadership in running the bank.
The initiative to establish the bank was taken by former Secretary A.Z.M. Shamsul Alam, funded by pious businessmen from various regions of the country. Even if they held different views or affiliations, they remained united for the sake of the bank. Political reasons never led to conflicts or clashes within AIB PLC's leadership.
At one point in 2017, S Alam's younger brother, Abdus Samad Labu, assumed a leadership role. Yet, because there was strong representation from all influential parties on the board, the bank was never run under anyone's sole absolute authority. As a result, despite some risks, it did not fall into any major crisis. Abdus Samad Labu has not been reinstated in the new board.
Chairman's Vision for the Future
When asked about the overall situation, newly elected Chairman Badiur Rahman said, "When I was first given the responsibility as Chairman in 2008, Bangladesh Bank had an observer at Al-Arafah Islami Bank. Alhamdulillah, overcoming that severe challenge, we were able to lead this bank towards prosperity during my 8-year tenure. Now, in 2026, with Bangladesh Bank once again appointing an observer to AIB PLC, I have been handed the responsibility of the board in the face of a similarly daunting challenge. With the cooperation of all concerned, I will try to fulfill the duties entrusted to me properly. InshaAllah, just like in the past, Al-Arafah Islami Bank will soon turn around once again."
https://thedailyexpress.news/news/business/1f184f3f-8241-6670-8ee5-1bda89d9f726