5 more banks controlled by S Alam under threat

Not only the Islami Bank, the S Alam Group, which was very close to the recently ousted government, has put five other banks in their control under threat by looting money from these banks at whim.

These banks have not been able to deposit money to the central bank as per the demand over the last 18 months as the money laundered abroad in the name of loans has not returned. However, former Bangladesh Bank (BB) governor Abdur Rauf Talukder maintained regular activities of these banks by providing special facilities. Following the political change the central bank is curtailing the facilities.

BB sources say due to the deficit in the current account of these banks, the former governor printed money and provided several innovative facilities to these banks using his power for the survival of these banks.

He was backed by the top echelons of the then government. The former governor went into hiding following the fall of the Sheikh Hasina government. After that the central bank curtailed the ceiling of the facilities provided to these banks. At the same time, the BB barred these banks from clearing cheques of more than Tk 10 million.

Policy Research Institute executive director Ahsan H Mansur joined the central bank as the governor on Wednesday. He will decide what to do with these banks.

Speaking regarding this, former BB chief economist Mustafa K Mujeri said it won’t be right to retain any bank artificially anymore.  An independent study should be conducted to understand the actual situations in these banks. Otherwise, if we continue to keep providing special facilities to these banks, then the banking sectors will further weaken.

It has been learnt that the S Alam Group took control of the Islami Bank in January 2017. One third of the total loans distributed by the bank were taken by this group or its sister concerns.

The S Alam Group, in the same year, took control of the social Islami Bank with the help of defence intelligence agencies. They took control over the Bangladesh Commerce Bank a year before. Besides, the Global Islami Bank and the Union Bank have been under the control of the S Alam Group since their inauguration.

Chattogram-based S Alam Group took control of the Social Islami Bank in a special meeting held at the Hotel Westin in the capital on 30 October 2017. The then chairman, managing director and company secretary of the bank was picked up by the defence intelligence unit the day before the meeting. Incumbent chairman of the Bank, Belal Ahmed is the son-in-law of S Alam Group chairman Saiful Alam. The amount of distributed loans of the bank was around Tk 200 billion at the time of ownership change. Now the figure stands at nearly T 350 billion. Most of the money disbursed after the change of ownership of the bank was taken under the name of the S Alam Group and its sister companies, including Infinia Group and Nabil Group owned by Saiful Alam’s son Ahsanul Alam.

Three years ago the S Alam Group imported sugar and oil through the offshore banking unit of the bank. The company hasn't returned the money. However, the company was supposed to clear the due within a year as per the rule. Although the bank failed to realise the money within a year, the Bangladesh Bank has given the necessary approval to the bank using its special power. However, the approval has been cancelled in recent times, a source said.

As of 7 August, the bank had a deficit, including cash reserve ratio (CRR), worth Tk 28.77 billion. Still, it managed to remain in operation. Similar to Islami Bank, this bank recruited a large number of officers from Patiya in Chattogram. They are now serving in various key positions.

According to the central bank, the amount of default loans in the bank was Tk 95.68 billion at the end of 2023. But it only disclosed defaults amounting to Tk 16.44 billion, thanks to a special facility provided by Bangladesh Bank. Thus, the bank concealed default loans totaling Tk 79.24 billion, posted fake profits, and distributed dividends among the shareholders.

Jafar Alam, its managing director, said, “The Bangladesh Bank had set a target for regularising loans with a concession, and we have regularised more loans than the target. The current account was improving, but it has gone into deficit again due to the current situation. Steps have been taken to recover the loans disbursed from the offshore units."

Recently, multiple shareholders formed a human chain in front of the press club and alleged that the S Alam Group and its accomplices, in collusion with the previous government, embezzled billions of taka from the bank and laundered it abroad. They demanded immediate dissolution of the board of directors.

Global Islami Bank (formerly NRB Global Bank) and Union Bank began their operations in 2013. Later, the authorities appointed Prashant Kumar (PK) Halder, who is a notorious financial scammer, as the managing director of Global Islami Bank. These two banks disbursed most of their loans to various trading companies. According to officials from the loan departments of both banks, these loans eventually went to the S Alam Group.

In 2021, the central bank issued a letter to the Union Bank, saying that Tk 18.346 billion of its total disbursal were eligible to be considered as default. The amount was 95 per cent of the bank's total disbursed loans.

It indicated that the majority of the loans disbursed by the bank since its inception were non-performing. However, former Bangladesh Bank governor Abdur Rauf Talukder intervened and invalidated the decision.

Currently, the bank’s disbursed loans increased to nearly Tk 26 billion, and it now maintains a significant deficit in its current account with the central bank due to failure in recollection. On 7 August, its deficit, including CRR, was Tk 28.50 billion. Still, the bank managed to continue its transactions, but the central bank has now put a limit.

Union Bank chairman Salim Uddin, who was previously a director of Islami Bank, told Prothom Alo, "The Bangladesh Bank was providing money as a last resort, but has now stopped it. In the aftermath, there have been issues in clearing checks. Even though I am the chairman, I do not have much knowledge of the situation. I hope the issues are resolved soon. It is necessary to ensure good governance in banks."

When asked if he shares responsibilities for the situation in Islami Bank and Union Bank, Salim Uddin said, "We are representative directors, and we do not have the authority to make decisions."

The bank's vice chairman is  lieutenant general (retd)  Mollah Fazle Akbar. He was director general of Directorate General of Forces Intelligence (DGFI). S Alam Group chairman Saiful Alam's brother Rashedul Alam and family members are directors of the bank.

After PK Halder embezzled money in different names from Global Islami Bank, the bank didn't disburse money significantly. There has been no loan recovery for years. The default loans along with interest are increasing every year. The loans of the bank stood at Tk 131.41 billion last year. The chairman of the bank is expat Nizam Chowdhury. Saiful Alam's brother Shahidul Alam, brothers' wife and relatives are directors. Islami Bank's former managing director and Social Islami Bank's former chairman Mahabubul Alam is also director of the bank.

When seeking comment over the matter, the bank's MD Habib Hasnat didn't receive a call.

In 2004, S Alam Group took control of First Security Islami Bank from Sikder Group. S Alam himself is the chairman of this bank. After taking control, the bank is turned into a bank with Islamic ideology. The loan stands at about Tk 560 billion.

Speaking to Prothom Alo, a top official of the bank said the S Alam Group and its sister concerns owe about Tk 400 billion.

Sources said late president Hussain Mohammad Ershad and one of his family members were made directors of Union Bank by buying shares with loans from the First Security Islami Bank.

After his death, shares were transferred, but the loan was not paid. Although this loan was not paid years after years, this loan was not shown defaulted. So a deficit of Tk 84.72 billion stands at the current account of Bangladesh Bank including CRRS till 7 August. Bangladesh Bank recruited an observer at the bank last year as the irregularities intensified.

After taking control of Bangladesh Commerce Bank in 2016, residents of Patia were recruited randomly. Of the 1000 employees of the bank, around 700 are from Patia. Commerce Bank sources said Islami Bank, Social Islami Bank, Union Bank and First Security Bank under the ownership of S Alam Group took a loan of Tk 6.10 billion from the bank. But the bank is not getting back the loan. So it is suffering from a liquidity crisis.

The commerce bank had a deficit of Tk 5.03 billion in its current account including CRRS on 7 August. Meanwhile, the bank relieved employees from permanent jobs due to the liquidity crisis, and later gave recruitment on contractual basis. After the fall of the government, managing director Tajul Islam is not going to the bank. So a stalemate has been created at the bank.