Govt to take over Islami Bank
Special Report :
Bangladesh Bank Governor Dr. Ahsan H Mansur on Wednesday announced that the government would take over the shares of Islami Bank Bangladesh Limited (IBBL), currently held by the controversial conglomerate S Alam Group, in accordance with the law.
Speaking at a press conference at the central bank’s head office, Mansur revealed that the central bank had decided to dissolve the current board of directors of IBBL, and a new, independent board would be formed to oversee the bank’s operations.
Dr. Mansur also stated that Bangladesh Bank is actively investigating the extent of S Alam Group’s shareholding in Islami Bank. He clarified that until all loans taken by S Alam from the bank are repaid, their shares would remain under the custody of the government.
The governor added: “It will be easier to identify the shares held in their names, but it will take some time to identify the shares held under proxy names. The Anti-Corruption Commission (ACC), the Financial Intelligence Unit (BFIU), and the CID will work together to recover the money looted by S Alam.”
This decisive action comes amid growing pressure from a segment of officials and former directors of the bank, who have been demanding the dissolution of the current board. Several letters were sent to the Bangladesh Bank governor outlining concerns about the bank’s governance and the influence of S Alam Group, which currently holds 82 percent of the bank’s shares.
The conglomerate gained control of IBBL in 2016 with the backing of the Hasina regime, raising concerns about political interference in the bank’s operations.
In a related development, the Bangladesh Bank has imposed lending limits on six banks owned by S Alam Group. These banks include Islami Bank Bangladesh, Social Islami Bank, First Security Islami Bank, Union Bank, Global Islami Bank, and Bangladesh Commerce Bank.
According to Bangladesh Bank spokesperson Md Mezbaul Haque, these banks must now obtain central bank approval before granting any loan exceeding Tk5 crore.
Additionally, overdue loans or those exceeding the credit limit cannot be renewed without cash recovery. The central bank’s letter to the banks emphasizes that with exceptions such as agricultural investment, working capital, investment in the CMSME sector, investment under incentive packages, Secured Overdraft (SOD) against Fixed Deposit Receipts (FDRs), and Import Letters of Credit (LCs) against 100% cash margin, no investments can be made in any other sector without prior approval. Furthermore, the banks are required to submit monthly reports on the investment realization of their top 20 investors to the central bank.
These restrictions come amid liquidity shortages at several Islami banks, which have been exacerbated by extensive borrowing by entities owned by S Alam Group. Previously, similar restrictions were placed on National Bank, another private-sector institution.
As part of the ongoing shakeup, IBBL has suspended eight top-level officials amid growing pressure from within the bank, particularly following the fall of the Sheikh Hasina-led Awami League government.
The suspended officials include additional managing director JQM Habibullah, deputy managing directors Md. Akij Uddin, Mohammad Sabbir, Miftah Uddin, Kazi Md. Rezaul Karim, and Md. Abdullah Al Mamun, chief anti-money laundering compliance officer (CAMLCO) Taher Ahmed Chowdhury, and Training Institute principal Nazrul Islam.
These suspended officials are known to be close associates of S Alam Group’s owner, Saiful Alam. DMD Akij Uddin, who is also Saiful Alam’s personal secretary, along with Miftah Uddin, oversaw human resources and loan distribution at the bank. Their suspension has been seen as a significant step in removing S Alam Group’s influence over the bank’s operations.
Following the fall of the previous government, IBBL employees have been actively demonstrating to free the bank from the control of S Alam Group and individuals associated with Patia.
The demonstrators have demanded the dissolution of the board of directors and the prosecution of those involved in loan irregularities. Additionally, around 10,000 employees from Saiful Alam’s Patia upazila in Chattogram, who were appointed over the last seven years, have not been able to join work since the government’s collapse.
Managing Director Mohammed Monirul Moula, however, managed to return to the office on Sunday and Monday. His return was followed by the suspension of the eight officials, a decision that was communicated on Monday. Despite multiple attempts, Monirul Moula did not respond to requests for comments.
Once a symbol of trust and reliability, Islami Bank was a leader in attracting both local deposits and foreign currencies. The bank’s success was such that Bangladesh Bank considered it critical to the financial stability of the entire banking sector. If IBBL were to face a crisis, it would pose a “systemic risk” to the country’s banking system, something that would be difficult to contain.
However, the situation at IBBL started deteriorating in 2017 after a government decision to “free the bank from the grip of Jamaat.” That year, S Alam Group, a conglomerate close to the then-ruling Awami League government, took control of the bank. Since then, S Alam Group, along with Nabil Group from Rajshahi, has reportedly extracted Tk 500 billion (approximately one-third of the bank’s total loans) through known and anonymous persons and entities over the past seven and a half years.
No rules were followed in these massive withdrawals, and many bank officials believe that the actual amount laundered from the bank could be even higher than what has been uncovered so far. These revelations have significantly damaged the bank’s reputation and contributed to its current crisis.