Padma Bank continues costly rent despite massive losses

An office worker named Jamal Hossain remains locked out of his matured savings account at Padma Bank’s Dhanmondi branch, where Tk2 lakh from a monthly savings plan—due since January 2025—has yet to be released. His situation mirrors that of thousands of other depositors across the country, many of whom remain unable to access their savings despite accounts reaching maturity long ago.

By year-end 2025, private depositors had entrusted over Tk3,000 crore to Padma Bank, yet the institution continued leasing a prime Gulshan-2 office at Finance Square for Tk60 lakh monthly—a property connected to its former chairman, Chowdhury Nafeez Sarafat. Facing money-laundering allegations, Nafeez has remained overseas since 2024. The bank relocated its headquarters to Finance Square in 2022, during his tenure as chairman, when the bank’s financial stability was already deteriorating. Currently, the premises house the bank’s main office, a primary branch, and an Islamic banking unit across approximately 24,000 square feet, at a rental cost of Tk250 per square foot.

Criminal Investigation Department (CID) findings reveal the bank also prepaid Tk14 crore in rent, a deal approved by Bangladesh Bank under the governorship of Abdur Rouf Talukder. However, investigators uncovered serious conflicts of interest, as the property was legally tied to Nafeez through his wife, Anjuman Ara Sahid, and their minor son, Rahib Safwan Sarafat Chowdhury.

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Financial Troubles

The bank’s struggles deepen with its failure to recover over Tk219 crore invested in the troubled Bangladesh Fixed Income Investment Special Purpose Vehicle (BFISPV). The fund, managed by RACE Asset Management, where Nafeez also serves as chairman, was allocated to Padma Bank between 2015 and 2016 while he remained on its board. In July 2024, the securities regulator froze transactions in another RACE-managed fund after uncovering illegal share trading. On November 27, 2025, the CID filed a money-laundering case against Chowdhury Nafeez Sarafat, his family members, and an associate, accusing them of laundering more than Tk16.13 billion.

Bank’s Current State

Padma Bank reported a staggering Tk9,300 crore loss in 2025, operating now with severely reduced capacity. Though it retains 74 branches, many function minimally or remain inactive. Staffing has been slashed from 1,100 to around 700 employees, with senior managers and branch leaders departing, leaving some locations staffed only by junior workers, clerks, and security personnel.

Even employees face financial strain. While salaries are electronically credited, staff report being unable to withdraw funds for the past three years. Kazi Md Talha, the bank’s acting CEO, acknowledged liquidity shortages prevent full payouts. The bank’s 2025 audit revealed a capital-to-risk-weighted-assets ratio of -187.14%, far below the required 12.5%, with a capital deficit of Tk6,224 crore. It has not met statutory reserve requirements since 2016, facing a cash reserve shortfall of Tk232.39 crore, negative operating cash flow of Tk789.78 crore, and a liquidity gap of Tk5,122 crore. Total deposits reached Tk6,611 crore, with over Tk3,000 crore from individual accounts.

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Regulatory and Governance Issues

The CID investigation confirmed violations of Bangladesh Bank’s BRPD Circular 12, which bars banks from purchasing services or goods from directors or affiliated entities. The lease agreements with Dynasty Homes, a firm controlled by Nafeez, directly contravened these rules. The bank’s governance has collapsed further with no permanent managing director since Tarek Reaz Khan resigned in January 2024, exceeding the central bank’s three-month interim limit. The board, 68% government-owned, became non-functional after political changes on August 5, 2024, disrupting quorums following MD removals at state-owned institutions.

Despite its dire condition, Padma Bank has failed to obtain central bank liquidity support. Initial requests under the interim government sought Tk3,500 crore, later increased to Tk5,000 crore under the current administration. Insiders estimate Tk8,000 crore would be needed to stabilize operations. A central bank source cited hesitation due to Nafeez’s ongoing representation on the First Bangladesh Fixed Income Fund board. Any liquidity injection risks benefiting existing directors, prompting reluctance among state-owned bank officials to assume responsibility. A definitive solution likely requires government intervention through Bangladesh Bank’s formal resolution process.

Nafeez joined Padma Bank, then Farmers Bank, as a founding shareholder in 2013 and became chairman in January 2018 after Muhiuddin Khan Alamgir resigned amid widespread irregularities. He stepped down in January 2024, citing health concerns, though insiders claim he retains influence through fund ties and continues overseeing Finance Square’s rent payments. The 2025 audit highlighted catastrophic loan defaults: of Tk5,534 crore in outstanding loans, 94.51% were classified as non-performing. Cash recovery totaled just Tk48.15 crore, against operating expenses of Tk111.77 crore (excluding depreciation), resulting in a net interest income loss of Tk722.03 crore. Auditors warned these persistent deficits raise existential doubts about the bank’s viability.