Staff Reporter :
Bangladesh Bank (BB) has imposed stringent lending limits on six banks owned by the controversial S. Alam Group.
The central bank now requires these institutions to secure prior approval before granting any loan exceeding Tk5 crore.
In a directive issued on Monday, August 19, BB stated that overdue loans or those exceeding the credit limit cannot be renewed without recovering the outstanding cash.
The banks are Islami Bank Bangladesh, Social Islami Bank, First Security Islami Bank, Union Bank, Global Islami Bank, and Bangladesh Commerce Bank, as confirmed by Bangladesh Bank spokesperson Md. Mejbahul Haque.
This move follows a similar restriction imposed previously on the National Bank, a private-sector institution.
The central bank’s decision arrives at a critical time as Islami banks are facing severe liquidity shortages, partly due to extensive borrowing by entities affiliated with the S Alam Group.
Under the new directives, the banks are required to obtain central bank approval for any loan exceeding Tk5 crore.
Additionally, banks cannot renew overdue loans or those exceeding established credit limits without clearing the outstanding balances.
The directive also restricts the banks from investing beyond specified areas, including agricultural investments, working capital, and the CMSME (Cottage, Micro, Small, and Medium Enterprises) sector.
Investments must be secured with a cash margin, and loans cannot be renewed or extended without clearing overdue balances.
Furthermore, the banks are prohibited from acquiring existing investments in other financial institutions.
The banks are also mandated to submit monthly reports to the central bank detailing the investment realisations of their top 20 investors.
This decision comes amid concerns about the S. Alam Group’s extensive borrowing. Reports indicate that the Chattogram-based group, along with its related Nabil Group, has secured an astounding sum of over Tk50,000 crore in loans from Islami Bank Bangladesh Limited over the past seven and a half years.
This amount constitutes one-third of the bank’s total loan portfolio. Allegations suggest that these transactions involved both known and anonymous entities, with concerns that the actual amount involved in dubious transactions might be higher than reported.