Published: 07:46 AM, 05 July 2026 Last Update: 08:49 AM, 05 July 2026
Is Al Arafah Bank A Den of Malpractices and Financial Scams?
Grievous allegations of financial irregularities, bribery, illegal recruitments, power abuse and procedural violations have glared up at Al-Arafah Islami Bank PLC (AIBL), which has triggered concerns over governance, regulatory compliance and potential losses to the bank and its depositors.
Two senior officials—Md. Pearu (former Private Secretary to the ex-Chairman) and Mohammed Hossain (current Deputy Managing Director and Ex Motijheel Branch Manager)—are at the center of these claims, backed by internal documents, audit findings and regulatory actions. This report compiles evidence from credible sources, including a detailed KPMG Business and Backward Operations Review, to draw the attention of the Financial Institutions Division (FID), Bangladesh Bank, Anti-Corruption Commission (ACC), and the country’s people.
Immediate and uncompromising inquiries are essential to safeguard the bank from collapsing which will imperil ordinary account holders. Allegations against Md. Pearu Documents portray multiple instances of misconduct during the previous leadership: 1. BDT 10 crore blanket fund scam: Alleged misappropriation of AIBL foundation funds. The ex-Chairman reportedly became the sole signatory alongside the Foundation Secretary, bypassing other directors. Some media coverage has in the meantime spotlighted on unethical exercises like nepotism, declining share prices, undue intervention and depriving potential clients of loan facilities were described with evidences. A broad number of clients have told media houses that these morally degenerated breaches are still prevailing at Al Arafah Bank which is taking a toll on customers’ confidence. As a result the entire banking sector is right now on the verge of breaking down posing grim threats to Bangladesh’s economy.
In another mysterious event the bank’s Gulshan Branch issued a letter to one of its clients inquiring about KDS Group, a totally separate and unrelated organization, referring to recent unsubstantiated tabloid news through an official communication, breaking all professional and legal norms and in a clear display of malice. A few Bangladesh Bank (BB) officials have told journalists on condition of anonymity that BB is seriously working on reorganizing AIBL top management with competent and clean image functionaries.
Allegations further suggest that Badiur Rahman, former Chairman of the Board Risk Committee of AIBL led the bank efficiently but now he is being subjected to unjustified tagging and character assassination. A vested quarter is working viciously to manipulate the bank’s decision making role and to corner skilled bankers and to hand the bank down to oligarchy syndicates.
Latest updates show that
Specific withdrawals cited include BDT 2 crore by Driver Ripon, BDT 6 Crore linked to Md. Pearu, and BDT 2 crore from Khatunganj Branch. Evidence, including CCTV footage (allegedly destroyed later), points to funds held by Pearu after the ex-Chairman left the country. 2. Bribery in recruitments: Numerous appointments allegedly involved bribes of BDT 18-20 lakh per person. A joint account in the names of Mr. Delwar (linked to ex-Chairman’s projects) and Md. Pearu at Gulshan Branch reportedly received these funds. Under these circumstances major stakeholders in the bank including leading depositors are putting the onus on the central bank to appoint transparent, learned and skilled directors in Al Arafah Bank Limited to enable it to rise from perils and woes.
Bangladesh Financial Intelligence Unit (BFIU) froze the account, stranding significant amounts. Proof is claimed to exist at the branch. Reports suggest that terminated PS Pearu is attempting recovery with assistance from current officials, including MD Rafat Ullah. 3. Other Issues: Additional claims cover illegal appointments, transactions, foreign investment contracts, and funds routed through family accounts (e.g., wife’s accounts, later closed after withdrawals). It points out systemic abuse of power, lack of oversight, and potential money laundering risks. Detailed Record of Mr. Mohammed Hossain (Current DMD & Motijheel BM) A comprehensive KPMG report (pages 64-70) outlines Mr. Hossain’s (ID: 001696) long history of regulatory violations, disciplinary actions, and compliance failures across branches like Banani, Uttara, Dhanmondi, and VIP Road. Despite accelerated promotions and profit claims, recurring issues emerged. Key Findings from KPMG Report: • Accelerated Promotions: Promoted to AVP after ~2 years (vs. required 3), VP after ~1.25 years (vs. 3). Recent DMD promotion also noted against eligibility norms. Missing APRs raise questions. • Multiple Warnings and Show-Cause Notices: • Irregularities in investment approvals and collateral verification (e.g., Saigal Brothers case: defective collateral, double-mortgaged properties, encumbrances). • Non-compliance with Bangladesh Bank provisioning and rescheduling guidelines (e.g., Shahrin Fashion Wear Ltd., Nurul Islam – insufficient/no down payments). • Major lapses in large investments (e.g., S Suhi Industrial Park Ltd.: BDT 122 crore disbursed without proper monitoring, equity verification, or progress; halted projects, diverted funds, missing goods/machinery). • Similar issues with A.S.S Knitwear Ltd., Affinity Communications, Pabna Knit Design Ltd. (unsecured liabilities, procedural breaches). • Administrative Actions: Formal charge sheet (2019), demotion from EVP to SVP (2020) for misconduct, later reinstated citing profits. Further warnings for forced loans and other lapses persisted. • Impact: Exposed the bank to significant financial, reputational, and operational risks. Unrecoverable liabilities, regulatory scrutiny from Bangladesh Bank, and weak internal controls highlighted. Recommendations include mandatory training, accountability for recoveries, and safer reporting cultures. Mr. Hossain’s tenure as Branch Manager involved approving risky portfolios without due diligence, documentation failures, and supervisory lapses. Call to Action: The government, Bangladesh Bank and ACC must launch a swift, transparent investigation. Evidence (KPMG report, branch records, BFIU freezes) should be secured. Accountability is vital to restore people's trust in AIBL and the whole banking system.
