The controversial S Alam Group has withdrawn over Tk 90,000 crore loans from Islami Bank Bangladesh alone, accounting for more than 50 per cent of the shariah-based bank鈥檚 total loan portfolio, according to newly appointed chairman Md Obayed Ullah Al Masud.
He disclosed this shocking figure during a press briefing on Thursday, following a meeting with Bangladesh Bank governor Ahsan H Mansur. Other board members of the bank were also present.
By the end of August, Islami Bank鈥檚 total loans stood at nearly Tk 1.80 lakh crore, according to bank officials.
Masud stated, 鈥楾he group secured over 50 per cent of the bank鈥檚 total loans, both in their name and through anonymous accounts, while the exact figure is still being determined.鈥�
He added that it would take approximately a week to finalise the loan data. Three audit firms have been appointed to investigate all kinds of irregularities that occurred at the bank.
S Alam Group, under the patronage of the ousted Awami League-led government, seized full or partial control of eight banks, central bank officials said.
The group has been accused of rampant irregularities, particularly in recruitment and loan disbursement, they said.
Bank insiders allege that S Alam withdrew close to Tk 2 lakh crore from the banking sector, primarily from the eight banks under its control, with much of the amount funnelled through anonymous channels, they said.
These banks are First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, Islami Bank Bangladesh, Al-Arafah Islami Bank, National Bank, and Bangladesh Commerce Bank.
The central bank has now reconstituted all eight banks and appointed independent directors to oversee their operations.
New Islami Bank chairman said that the S Alam Group allegedly inflated the value of their assets to secure massive loans, and the bank is now re-evaluating these assets.
The collateral offered was inadequate to cover the debts, therefore, the bank聽 made a formal request to the Ministry of Law to track down other assets owned by the group.
On August 22, Bangladesh Bank freed Islami Bank from S Alam鈥檚 control, reconstituting the board and appointing Masud, former managing director of Rupali Bank, as the new chairman.
S Alam Group, reportedly with the backing of a state agency, forcibly took over the bank in 2017, side-lining its founding shareholders and directors.
Bangladesh Bank, under the leadership of former governor Abdur Rouf Talukder, provided all kinds of possible liquidity support to these banks despite knowing that these banks continued allowing the S Alam Group to withdraw money as anonymous loans.
This occurred even though the banks鈥� current accounts remained negative, leaving them incapable of making any transactions.
After exhausting all legal avenues, Bangladesh Bank resorted to unethical and illegal means to provide these banks with additional liquidity.
Despite the banks having no funds in their current accounts, the central bank printed money to keep them afloat, according to Bank Bank officials.
As criticism mounted from various corners, Bangladesh Bank was forced to halt this unsustainable practice and began searching for alternative methods to support the struggling banks.
At last, the central bank provided total $1.1 billion equivalent in financial support to Islami Bank Bangladesh since January based on a fake dollar purchase quotation.
On July 3, Bangladesh Bank falsely reported a $550 million purchase from Islami Bank, even though no actual dollars were transferred. In this fabricated transaction, Islami Bank received Tk 6,490 crore at a rate of Tk 118 per dollar, the officials said.
Islami Bank only returned $100 million, leaving $450 million unpaid. After the fall of Sheikh Hasina, Bangladesh Bank hurriedly adjusted the remaining amount in the bank鈥檚 current account which had already been negative.
This review underscored the severity of financial mismanagement and exposed the deep-rooted collusion between the central bank and a private institution wielding enormous power through political connections.
In the press briefing, Masud expressed hope that the bank would return to positive growth by the end of the year.
Addressing concerns about customer difficulties in withdrawing deposits, he reassured that the recent influx of deposits has exceeded withdrawals, leading to a net positive balance.
When questioned about punitive actions against officials who abetted S Alam, Masud clarified that while lower-level employees would not be removed immediately to avoid a destabilisation risk, removal of senior officials was already underway.聽
He promised that all those involved would face legal consequences with no exceptions.
There will be no more restrictions on the business operations and opening Letter of Credits (LCs) in Islami Bank from now on, he said.
Masud also unveiled a recovery roadmap for the bank. The first phase, running through December 31, focuses on identifying and addressing critical issues.
The second phase, from 2025 to 2026, aims at full recovery, while the 2027鈥�2029 period is designated for progress and growth, according to the bank鈥檚 new chairman.
