Questions have emerged over the composition of Al-Arafah Islami Bank PLC’s new board after Bangladesh Bank returned control of the lender to sponsor directors, with seven of the 14 approved directors linked to KDS Group or its associated companies.
On 15 July, Bangladesh Bank approved a 14-member board comprising 12 sponsor directors and two independent directors. Independent directors had earlier run the bank after its board was dissolved following the political change in 2024.
The KDS-linked directors include KDS Group Chairman Alhajj Khalilur Rahman, Mahbub Ahmed, nominee director of KDS Garments Industries Ltd, Farid Uddin Ahmed, nominee director of KDS Textiles Mills Ltd, KDS Group Managing Director Alhajj Salim Rahman, Alhaz Ahamedul Hoque, Badiur Rahman, a close relative of the KDS family, and Sharif Uddin Taslim, nominee director of KY Steel Mills Ltd, an associated company of KDS Group.
Corporate governance experts said excessive representation of a single business group on a bank’s board could increase the risk of conflicts of interest. They said Bangladesh Bank is expected to assess directors’ qualifications, shareholdings, relationships and effective ownership structures before approving boards.
Bangladesh Bank said it returned Al-Arafah Islami Bank to sponsor directors after the lender’s financial condition improved. Executive Director and Spokesperson Arief Hossain Khan said the board was approved in line with existing laws, shareholding structures and regulatory provisions.
“The financial condition of Al-Arafah Islami Bank has improved compared with before. That is why the bank has been handed back to its sponsor directors,” he said.
Established in 1995, Al-Arafah Islami Bank saw the influence of Chattogram-based KDS Group and individuals linked to S Alam Group increase after 2009. Following the political transition in 2024, Bangladesh Bank dissolved the board and placed the Shariah-based bank under independent directors to remove it from the control of the two business groups.
The prominent presence of KDS-linked members on the new board has triggered fresh discussion in the banking sector over whether the group’s influence has returned.
