Bangladesh Bank has decided to launch asset quality reviews of 11 more private commercial banks as part of its effort to uncover financial irregularities and take informed decisions about these banks’ future.
The banks include Islami Bank Bangladesh, National Bank, Al-Arafah Islami Bank, IFIC Bank, United Commercial Bank, Premier Bank, AB Bank, NRB Commercial Bank, NRB Bank, Bangladesh Commerce Bank, and Meghna Bank.
According to BB officials, the new round of forensic audits will examine the financial soundness of the 11 banks and determine whether any of them should be merged, liquidated, or supported with bailout funds.
The World Bank will fund the audit process, with international firms selected by the lender conducting reviews of the banks’ overall assets.
Previously, Bangladesh Bank completed asset quality reviews of six banks: First Security Islami Bank, Exim Bank, Global Islami Bank, Social Islami Bank, ICB Islamic Bank, and Union Bank.
These audits were supported by the Asian Development Bank as part of efforts to improve governance and transparency in the banking sector.
In January, the central bank asked the six banks to place their managing directors on a three-month leave ahead of forensic audits.
Based on the findings, Bangladesh Bank has decided to merge five shariah-based banks into one, citing their severe financial distress.
Several of the 11 banks— including IBBL, Al-Arafah, National Bank and BCB — were previously linked to the controversial S Alam Group, a powerful business conglomerate closely aligned with ousted prime minister Sheikh Hasina.
S Alam Group had also controlled FSIB, Global Islami, Social Islami, and Union Bank.
During the Awami League regime, the group allegedly siphoned off nearly Tk 2 lakh crore from the banks under its control, including around Tk 75,000 crore from Islami Bank alone, using political influence to evade oversight.
After the August 5, 2024 mass uprising that toppled the Awami League government, the interim governemnt restructured the boards of the affected banks and removed S Alam’s influence.
Bangladesh Bank has outlined specific areas for the Asset Quality Review (AQR), which will include loan classification, asset risks, regulatory compliance, large defaulters, single borrower exposure, and asset-liability mismatches.
Auditors will also evaluate loan collaterals, property valuations, and connections between loans and bank directors or their subsidiaries.
The reviews aim to reveal the true financial condition of the banks and uncover systemic failures that contributed to rising non-performing loans and an erosion of depositor trust.
