The Bangladesh Bank on Wednesday dissolved the Islami Bank Bangladesh board to free it from the control of S Alam Group and decided to appoint independent directors temporarily to manage the bank.
The government has also seized all shares held by the Chattogram-based S Alam Group and its associates in Islami Bank and plans to sell those shares later to recover the group’s liabilities to the bank.
Bangladesh Bank governor Ahsan H Mansur announced the decision at a press conference, stating that nearly all of Islami Bank’s shares were held by the S Alam Group and its connected individuals.
He said that all the other banks would gradually be freed from S Alam’s control amid the seizure of all of their shares under government control.
The Bangladesh Securities and Exchange Commission has already restricted the transfer or sale of shares in six banks controlled by the group.
On August 20, the commission imposed the restriction on 26 individuals and 56 companies linked to the S Alam Group.
The Bangladesh Financial Intelligence Unit also froze the bank accounts of S Alam and his family members on August 18.
In 2017, S Alam Group took control of Islami Bank, allegedly with the help of a state agency, on the pretext of ousting individuals linked to Jamaat-e-Islami.
The government agency oversaw the whole operation when some individuals were forced to sign documents to facilitate the transfer of the bank’s ownership.
Over the past seven years, the group allegedly took Tk 75,000 crore from the bank under various anonymous names, accounting for half of the bank’s total loans.
Sources revealed that these loans were taken without following standard banking rules by companies linked to S Alam Group chairman Saiful Alam, his wife Farzana Parveen, his son Ahsanul Alam, their relatives, and employees.
Ahsanul Alam is the current chairman of Islami Bank.
Since 2017, S Alam Group, backed by the government, has also gained control of five other banks similarly. These banks are Social Islami Bank, First Security Islami Bank, Union Bank, Global Islami Bank, and Bangladesh Commerce Bank.
On May 7, the BB also handed over the control of the National Bank to individuals connected with the S Alam group.
The BB restructured the board of the bank on August 20 to free it from S Alam control.
The group, with the support of former governors Abdur Rouf Talukder and Fazle Kabir, reportedly withdrew around Tk 2 lakh crore from the banking sector.
Most of these loans were siphoned off and never used for business within the country, BB officials said.
Over 82 per cent of Islami Bank’s shares are held by S Alam Group and its associates, often under anonymous and forced acquisitions.
According to Dhaka Stock Exchange data, Islami Bank has a total of 1.6 billion shares, of which 82 per cent, valued at Tk 5,162 crore at current market rates, were acquired by the group.
Despite banking regulations that prohibit any group from owning more than 10 per cent of a bank’s shares, the central bank had previously not intervened in S Alam Group’s substantial share acquisition.
All of the banks under S Alam’s control are grappling with severe liquidity shortages and are surviving solely on an ‘illegal’ lifeline provided by Bangladesh Bank.
The latest action against the errant group came after Sheikh Hasina resigned as prime minister and fled to India on August 5, amid an unprecedented student-led uprising.
During Wednesday’s press conference, Mansur said that the investigation into the money laundering allegation against S Alam Group might be reopened soon.
He emphasised that no leniency would be shown to those who took loans and failed to repay them, with legal measures being pursued to recover funds.
He also mentioned that weak banks’ boards would be dissolved, as was recently done with National Bank, and the same would be applied to Islami Bank.
Mansur clarified that the government would not take over the operations of these banks.
Instead, independent directors would be temporarily appointed, and any shareholders, excluding S Alam Group, holding more than 2 per cent of shares and deemed capable might join the board in the future.
Regarding the loans taken by S Alam Group, Mansur said that exact amounts, including those obtained under false names, were still being investigated but would be uncovered in time.
Addressing the broader financial scandals in the banking sector, Mansur noted that resolving these issues would take time and could not be accomplished quickly.
He stressed that the central bank’s focus is now on protecting the economy, preventing defaults, and ensuring that Bangladesh’s international transactions remain stable.
New Age
