Islami Bank Bangladesh PLC shows Tk20,547 crore large loans (which Shariah banks officially call investments) taken by S Alam Group – the controversial conglomerate which took over the bank in 2017 with political backing from the previous government.
The bank also disbursed Tk3,047 crore large loans to Nabil group, known to be a distributor of S Alam in Rajshahi.
These two groups took Tk23,594 crore from Islami Bank under large loans until December 2023, according to the bank’s latest annual report.
The amount was 14.74% of the bank’s total disbursed loan amount in 2023.
Last year, Islami Bank’s loan disbursement amount stood at Tk160,026 crore.
The annual report mentioned 39 large borrowers’ loan amounts.
Among the borrowers, the number of S Alam Group companies was nine and the number of Nabil Group companies was two.
From the Islami Bank, S Alam Steels and Sugar borrowed Tk4,216 crore, S Alam Vegetable Oil Tk4,100 crore, S Alam Super Edible Oil Tk3,986 crore, S Alam Cold Rolled Steels Tk1,911 crore, Chemon Ispat Tk1,644 crore, Unitex LPG Tk1,615 crore, Unitex Steel Mill Tk605 crore, Infinite CR Strips Tk1,476 crore, and Ideal Flour Mill Tk1,042 crore.
Nabil Group directly borrowed Tk2,047 crore and its parent company Naba Farm borrowed Tk1,000 crore from the bank at the end of December last year, according to Islami Bank’s annual report 2023.
However, several media reports have claimed that the S Alam Group borrowed Tk74,972 crore loans from the bank under its own name, as well as under names of many companies that only exist on paper.
But those figures did not come up in the bank’s annual report.
Moreover, according to the annual report, S Alam Steel & Sugar Industry, Vegetable Oil and Super Edible Oil Company have taken loans that exceeded the limit imposed by the bank company rules.
S Alam Steels & Sugar Industry has taken Tk4,216 crore even though they have a loan limit of Tk4,000 crore, showed the data until December last year.
On the other hand, the loan limit of S Alam Vegetable Oil was Tk3,840 crore, but the total loan amount stands at Tk4,100 crore.
S Alam Super Edible Oil has a limit of Tk3,840 crore loans, but Tk3,980 crore has been taken.
Last week, Bangladesh Bank’s spokesperson and executive director Md Mezbaul Haque told the media that the central bank will instruct the banks to review questionable loans.
Defaulted loans
The total disbursed loan amount of the Islami Bank was Tk160,026.56 crore until December last year.
Among the disbursed loans, the classified/defaulted loan amount was Tk6,918.81 crore or 4.32% of total loans.
However the bad loan amount was Tk4,594.63, 66% of the total classified loans.
Bad loans are also known as loss loans, because such debt cannot be recovered easily. Many banks are also reluctant to go through the lengthy legal process to recover it.
Apart from this, Islami Bank’s written off loan amount stood at Tk1,216.79 crore last year, which also adds to the classified loans.
The bank had total defaulted loans to the tune of Tk8,135.6 crore at the end of last year.
Customers demand action
Customers of Islami Bank Bangladesh PLC have demanded the cancellation of all appointments made by the S Alam Group after 2017, publication of accurate information on the amount of money laundered by the group, and immediate action to bring those responsible to justice.
They have also called for the removal of the current chairman of the bank’s board of directors and the reinstatement of the bank's founders to the board.
They made the demands at a meeting of customers organized by the “Customer Forum of Shariah-based Islamic Banking” at a hotel in Dhaka city on Saturday.
Customers from across the country expressed their views at the meeting. The welcome speech was delivered by Abdul Haque, former director of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), and the chief guest was economist Prof Abu Ahmed.
Ahmed said that a conspiracy has been at work to destroy the reputation of Islamic banking in Bangladesh. “S Alam Group targeted and took control of Islamic banks, leading to a situation where customers no longer want to open LCs or deposit money in Islami Bank.
Muhammad Abdul Majid, former chairman of the National Board of Revenue, pointed out that customers are the most significant strength of a bank. “Banks are formed with customers' money. When someone buys a few shares and claims ownership, irregularities begin. There was a time when Islami Bank customers could not get loans, but a particular group granted loans to whomever they pleased according to their whims.”
