Bangladesh Bank has removed AKM Shaheed Reza from the board of Mercantile Bank due to his involvement in a loan scandal.

As a result, Reza, a former chairman of the private commercial bank, will not be able to participate in any bank's operational activities in the next two years.

The banking regulator took the decision on Tuesday and issued an office order to this end.

The Bangladesh Financial Intelligence Unit (BFIU), an autonomous entity that monitors money laundering, and the Financial Integrity and Customer Services Department, a wing of the central bank, have carried out investigations on the issue recently, said Md Serajul Islam, spokesperson and an executive director of the BB.

"The two entities found that Reza was involved in the irregularities in managing loans violating the rules and regulations."

So, the central bank has removed him from the board of Mercantile Bank, Islam said.

The BFIU and the central bank inspection teams unearthed that Reza had received a portion of loans, which were actually disbursed to PK Halder, from International Leasing and Financial Services Ltd (ILFSL).

Halder, a former managing director of now-defunct NRB Global Bank, is believed to have fled to Canada after he and his accomplices misappropriated about Tk 2,500 crore ILFSL, Tk 2,200 crore from FAS Finance, Tk 3,000 crore from Peoples' Leasing, and Tk 2,500 crore from Reliance Finance between 2009 and 2019.

Reza has a direct link with Halder, according to the BB inspection.

Contacted, Reza told The Daily Star that the loan taken by him was now unclassified, and he was giving instalments on time.

"ILFSL disbursed a portion of loans to me from another loan account. And I did not have any involvement with the delinquent borrower. The NBFI did it without informing me."

He said that he would apply to the central bank board for the withdrawal of the decision.

According to the central bank notice, Reza was involved in activities that went against the interest of depositors. So, the standing committee of the central bank has decided to remove him.

In January, the BB served a show-cause notice on Reza, asking him to explain his involvement in the scam.

He submitted his response on February 3, but it failed to satisfy the central bank.

On April 4, Reza made a written explanation to the standing committee. But the committee did not find the explanation to be logical, leading it to recommend his removal from the board.