Senior officials accused of embezzling corporate deposits disguised as agent banking commissions over a decade
Al-Arafah Islami Bank, one of Bangladesh’s publicly listed Shariah-based banks, has been rocked by a massive financial scandal involving the embezzlement of Tk 109.21 crore through a decade-long commission fraud. A recent Bangladesh Bank inspection has revealed that senior officials at the bank misappropriated funds by falsely showing large corporate deposits as grassroots collections under the agent banking model, a system originally designed to serve rural and low-income customers.
The investigation, conducted at the bank’s head office in January 2025, uncovered a sophisticated scheme involving the Agent Banking Division, Treasury, and the Financial Administration Division (FAD), with the knowledge and participation of top management. The report found that from 2015 to 2024, Al-Arafah paid Tk 361.11 crore in commissions to agents at rates between 1.5% and 3%. However, most of these commissions were not based on actual small-scale deposits from rural customers. Instead, large corporate funds—collected by bank insiders—were routed through agent outlets, falsely documented as grassroots deposits to generate unauthorized commissions.
This manipulation not only led to the misuse of funds but also enabled tax evasion. Bangladesh Bank noted that the bank failed to deduct and remit the mandatory 10% tax on these commission payments, resulting in a revenue loss of Tk 36.11 crore to the national exchequer. While agent banking was intended for transactions between Tk 10 to 15 lakh, Al-Arafah processed corporate deposits worth several crores through this channel, offering high interest rates of up to 13% along with extra commission incentives.
Several senior officials have been named in the report. Asadur Rahman, then Assistant Vice President and Relationship Manager, collected Tk 23 crore from the Civil Aviation Welfare Fund and routed it through the Atipara agent outlet to secure illegal commissions. His personal phone number was found registered to several corporate deposit accounts within the agent banking system, which were later deleted to obscure evidence. Other implicated officials include Shahidul Hossain, a Senior Principal Officer and the actual owner of Molla Enterprise—an agent outlet used to launder corporate funds. In June 2023, Tk 21 lakh was transferred from Molla Enterprise’s account to Shahidul’s personal account and later withdrawn in cash. Investigators also flagged suspicious transactions involving Shahidul’s wife and sister.
The report further detailed that corporate funds secured by Asadur Rahman were funneled through Molla Enterprise into accounts of Setu Enterprise, Kazi Enterprise, Muntaha Enterprise, Nazir Ahmed Enterprise, and Talha Enterprise—all reportedly connected to his family members. Former Senior AVP Shakhawat Hossain also received substantial transfers into his accounts between 2022 and 2024 through the same network. In May 2024, Tk 50 lakh was transferred from the Azhar Traders agent account to Muntaha Enterprise at Standard Bank, withdrawn in cash, and re-deposited into an account under the name of Tahmina Akhter, wife of former Deputy Managing Director and long-time Agent Banking Head, Abed Ahmed Khan. Investigators concluded that Abed Khan was the beneficial owner of that account, which alone saw transactions of Tk 2 crore in the 2024 fiscal year. Abed also maintained over 100 deposit accounts under various family members’ names.
At the financial administration level, CFO and FAD head Mohammad Nadim was found to have approved interest rates of up to 13% without proper authority, using ICT requisition slips instead of following standard approval processes. While Managing Director Farman R. Chowdhury had authorized interest rates in the range of 11.25% to 12.75%, Nadim routinely exceeded those limits and facilitated “commission-sharing” payments of 1.25% to specific branches to cover extra costs. These actions resulted in the misappropriation of Tk 285.25 crore—comprising Tk 186.75 crore in excess interest paid to corporate depositors and Tk 109.21 crore in unauthorized commissions.
The inspectors also discovered deliberate concealment of income and evasion of taxes. Both Chowdhury and Nadim maintained numerous fixed deposit receipts (FDRs) that were routed through General Ledger Head 1032204008 and later withdrawn in cash. Nadim alone managed at least 67 such FDRs. Other FAD officials, such as Monowar Hossain, were also implicated, suggesting a deeply entrenched culture of financial malpractice within the bank.
Additionally, Farman R. Chowdhury and Nadim awarded themselves unlawful incentive bonuses of Tk 51.9 lakh and Tk 1.9 lakh respectively, in violation of banking regulations. The report also emphasized structural issues that enabled the scam, noting that key officials had remained in the same departments for between 5 and 20 years, allowing the formation of powerful syndicates and unchecked abuse of authority.
In April 2025, Al-Arafah Islami Bank placed eight senior officials—including the MD and CFO—on mandatory leave as part of the internal investigation. While Asadur Rahman tendered his resignation, it has not been accepted due to the ongoing probe. Bangladesh Bank has described the situation as a clear case of systemic abuse and has called for further investigation and possible legal action.
