Islami Bank, the largest and most profitable bank in the country, has plunged into a bout of infighting within just five months of wholesale restructuring of the board of directors and top management.

The conflict stems from loan irregularities, lower dividend declaration and interference of a Chittagong-based business group in the affairs of the bank's board.

On May 20, a group of seven directors threatened to step down if any of them has to resign under pressure.

They made the threat following disclosure by Syed Ahsanul Alam, Islami Bank's vice-chairman and an independent director, on May 11 that he was being hassled by some quarters to resign.

Some of the 19 directors were also furious that the bank declared 10-percent dividend on April 2 for 2016 against a net profit of Tk 450 crore.

They believe that the board announced “the meagre dividend” to see the bank's share price go on a “free fall” so that a Chittagong-based big business group can buy the shares on the cheap.

On March 22, each Islami Bank share was traded for around Tk 45. A month later, the share price dropped by 30 percent to Tk 31.

The business group had allegedly bought shares of the bank in the name of seven companies that were registered with the joint stock companies last year.

At present, the seven companies hold 14.02 percent shares in the bank and have seven directors in the board, including Chairman Arastoo Khan, a retired bureaucrat.

The Arastoo-led board, formed after a major reshuffle in key positions in January, disbursed loans of over Tk 1,400 crore in just three months. Many of the loans were approved without maintaining proper rules and regulations, according to a Bangladesh Bank report.

Amid this situation, Islami Bank is set to hold its annual general meeting at the capital's Kurmitola Golf Club today.

One of the loans worth Tk 132.60 crore approved by the new board was for Infinit CR Strips Industries, a new company formed in February this year.

The loan proposal came from Chittagong's Khatunganj branch and the client is a sister concern of Armada Spinning Mills, one of the companies related to “the controversial business group”, according to a director of the bank.

Arastoo represents Armada Spinning Mills, a new company that has more than 2 percent shares in Islami Bank.

Infiniti's loan proposal, which was for building a steel-sheet manufacturing plant, did not include information about the client's banking activities, said the BB report.

In another instance of irregularity, the board in a recent meeting increased the loan limit for Sister Denim Composite, an affiliate of Thermax Group, from Tk 135 crore to about Tk 200 crore. The loan was given by violating the central bank's investment risk grading rule.

The bank's board also gave loans of over Tk 800 crore for six companies of Nassa Group without taking the required collateral, according to the central bank report.

The group has provided collateral worth Tk 268.63 crore against the requisite amount of Tk 338.59 crore.

Besides, the loans were given without credit ratings: some subsidiaries of Nassa are defaulters but the issue was overlooked when the loans were approved.

Nassa Group's Chairman Nazrul Islam Majumder is also the chairman of the Bangladesh Association of Banks, a forum for bank directors.

Moreover, some 150 employees were recruited without advertising for the positions in another act of malpractice by the new board. Of the new recruits, 34 were for the bank's sensitive IT department, said BB officials.

Islami Bank was set up in 1983 with nearly 70 percent of its sponsorship coming from the Middle East countries.

Since its inception, it has grown threefold every five years. It has over one crore depositors and handle about 30 percent of Bangladesh's remittances.

The bank has financed almost one in every four textile and garment factories in the country.  

National Bank Ltd (NBL) has put up Citycell's head office for sale after the mobile operator failed to pay back its loan of Tk 454.45 crore.

The bank published an advertisement yesterday in a newspaper requesting for tenders to purchase the 38,800 square feet floor space with 5.04 decimal of land in Mohakhali area. Interested parties can submit their offer by June 15, according to the advertisement.

Citycell, which has been out of service since October last year, said it is in the process of paying back the sum owed to NBL and has already opened talks with the bank on the issue.

“After we saw the advertisement we contacted the bank's top management and they said they will cancel the process by publishing another advertisement on the same newspaper this week,” said Faisal Morshed Khan, son of Citycell Chairman Morshed Khan. Choudhury Moshtaq Ahmed, the acting managing director of the bank, did not respond to phone calls and messages from The Daily Star.  Khan said they have already paid the Bangladesh Telecommunication Regulatory Commission's dues and will gradually pay back NBL's entire unpaid loan.

There are also talks with a foreign party to sell out Citycell, Khan said. “Discussion is on the table right now,” he added.

Earlier, the BTRC brought down the curtains on the country's oldest mobile operator over dues amounting to Tk 477 crore pertaining to spectrum and licence fees, revenue sharing and late penalty.

After the cancellation of its spectrum, Citycell had paid Tk 230.19 crore to the BTRC along with Tk 14 crore as tax to National Board of Revenue, according to court documents.

Citycell disputes the amount claimed by the BTRC, so the High Court formed a committee to settle the matter. The committee is still working on it.

After getting back its spectrum Citycell is yet to re-start its commercial operations as most of its towers across the country went under lock and key for non-payment of house rent, electricity bills and employees' salaries.

Recently, a group of employees served a legal notice to Citycell over their mounting amount of unpaid salaries and other benefits.

Citycell began its operations in 1993, though its licence was awarded in 1989.

Singapore's SingTel owns 44.54 percent shares in Citycell, Pacific Motors 37.95 percent and Far East Telecom 17.51 percent.

Shareholders had been trying for the last few years to sell the operator's licence but in vain.  

The operator's subscription reached a peak of 19 lakh in 2011, but before the suspension of spectrum its customer base stood at 1.25 lakh only. In fiscal 2014-15, its total revenue stood at Tk 139.77 crore, while its investment was zero, according to the BTRC's annual report.