Islami Bank Bangladesh PLC was the best performing bank in the country even just a decade ago. The bank surpassed all other banks in the country in various indices including abiding by the laws, serving the customers and other financial indicators.
The bank was way ahead in collecting local deposits or foreign currencies due to the people’s reliability on it. It grew so large that Bangladesh Bank would say - if the Islami Bank faces any crisis, that would create a “systemic risk” in the whole sector, which will be tough to prevent.
But the situation started to change from 2017. Because of the government’s political decision that year to “free Islami Bank from the grip of Jamaat”, S Alam Group, close to the immediate past Awami League government, took control of the bank.
Since then this business conglomerate and Nabil Group from Rajshahi have taken out Tk 500 billion through known and anonymous persons and entities in seven and a half years. The amount is one-third of the bank’s total loans.
No rules were followed to withdraw this money. The bank’s officials believe that the actual amount of money laundered from the bank is higher than the loan information available so far.
The money was withdrawn in the names of S Alam Group chairman Saiful Alam, his wife, son-in-law, relatives and other staff. New companies were created to withdraw money as loans.
The process of how the money was withdrawn from the Islami Bank is akin to how controversial Prashanta Kumar (PK) Halder withdrew money from four financial institutions. Those financial organisations are now on the brink of collapse with the depositors not getting their money back.
PK Halder was managing director of Aviva Finance and Global Islami Bank, owned by S Alam group.
Money laundered from Islami Bank is now not being recovered; as a result the bank is suffering from a liquidity crisis. The bank is paying fines to the regulatory body, Bangladesh Bank, on a daily basis for not being able to deposit liquidity as required.
At the same time, Abdur Rouf Talukder, the immediate past governor of the central bank, kept the bank alive for one and a half years by “printing money” with his special powers.
However, the former BB governor did take no action against those responsible for the decaying state of Islami Bank.
Nearly 10,000 officers, mostly from Patiya in Chattogram where the S Alam Group is rooted, have been recruited in the Islami Bank since the transition in its ownership in 2017. Following the recent transition in state power, the officials recruited before 2017 are now agitating to oust the new recruits from the banks. There were incidents of bullets being fired during scuffles between the two sides.
Ahsan H Mansur, executive director of the Policy Research Institute (PRI) and the would-be governor of Bangladesh Bank, believes that the bank was handed over to the S Alam Group for its destruction.
“The bank was given to the S Alam Group to devour it, and they have fulfilled the task... destroyed the bank. The money held by the bank flew abroad in the form of dollars. Now, it needs to make arrangements to recollect the money, by seizing all assets of S Alam Group and the entities that received the loans. Still, there is doubt if it will make up even one-third of the total loans,” he added.
How the bank was grabbed
In 2017, British magazine The Economist published in detail how Islami Bank was grabbed using an intelligence agency.
According to The Economist report, “It was an odd job for a spy agency. On the morning of January 5th military intelligence operatives phoned the chairman, a vice-chairman and the managing director of Islami Bank Bangladesh, picked them up from their homes and brought them to the agency’s headquarters, in Dhaka’s military cantonment.”
The Economist report further said, “A few hours later the bank’s board, meeting under the noses of intelligence officers at a hotel owned by the army, selected their replacements.”
According to the documents, on 5 January 2017, the representative of Armada Spinning Mill and former bureaucrat Arastu Khan was appointed as the new chairman of Islami Bank, and managing director of Union Bank Abdul Hamid Miah was appointed as the new MD.
Bangladesh Bank approved the appointments on the same day. The meeting was held at Radisson Blu Hotel in the capital under special security arrangements. This correspondent of Prothom Alo failed to enter the Radisson Blu Hotel that day. Armada is actually a sister concern of S Alam Group.
After S Alam Group took control of the bank, most of the entrepreneurs and general shareholders, including Islamic Development Bank (IDB), Dubai Islami Bank, Al-Rajhi Group, Kuwait’s government bank Kuwait Finance House and Saudi company Arabsus Travel and Tourist Agency gradually gave up their shares.
Apart from this, many people, including the local Jamaat-affiliated organisations Ibn Sina and Islamic Centre had to give up their shares in Islami Bank.
Before S Alam Group took over the bank, the foreigners’ share was as high as 52 per cent, which has now come down to 13 per cent.
How much money has S Alam taken out
When S Alam Group took control of Islami Bank in 2017, it had a loan of Tk 36 billion in the names of three sister concerns of the group. S Alam was a client of the bank’s Khatunganj branch in Chattogram.
At that time the total loan of the bank was Tk 616.41 billion and the deposit was Tk 681.35 billion. The number of employees at the bank was less than 10,000. After taking control of the bank, new branches were opened to increase deposits and people from Patiya were appointed.
Currently, the bank has 395 branches across the country and 250 sub-branches. At the end of 2023, deposits in Islami Bank grew to 1534.56 billion and loans to 1600.26 billion. That means the bank has issued more money as loans than deposits. This additional money came mainly from Bangladesh Bank.
The regulatory capital of Islami Bank is Tk 104.14 billion. As a result, the bank can give a maximum funded loan of Tk 15.62 billion and non-funded loan of Tk 10.42 billion to a group. In total, a group could get a loan of Tk 26.04 crores.
That is why, S Alam Group has created several groups, opened establishments under different names to launder billions of taka loaned from the bank.
An analysis of the documents received by Prothom Alo revealed that a Tk 141.67 billion loan was taken from the Islami Bank by institutions with S Alam’s name.
And, the debt of Unitex, a company owned by Saiful Alam’s daughter’s husband Belal Ahmed, is Tk 4.54 billion. Apart from this, the amount of loan involving S Alam is Tk 321.72 billion. These loans are taken from different branches of Chattogram, Rajshahi and Dhaka.
Besides this, the debt of various institutions of Nabil Group of Rajshahi is Tk 35.45 billion.
Speaking about this to Prothom Alo, Nabil Group Managing Director Aminul Islam said, “I do business honestly. I don’t have any problem with my loan in other banks. I didn’t have any control over Islami Bank loans. But I will repay the loans that are in my name. Annually my company’s turnover is Tk 300 billion. And, 15,000 people work in my group."
Islami Bank chairman Ahsanul Alam is the son of S Alam Group proprietor Saiful Alam. When he and managing director Muhammad Munirul Mawla were called to inquire about the overall affairs of the bank, their statements were not received.
However, Syed Abu Asad, a director of Islami Bank, told Prothom Alo, “Nobody is answering the phone now. I can’t even know anything. I attend meetings online and give opinions but those are not always accepted. I don’t know anything about who took how much of the loan.”
Abu Walid Chowdhury, coordinator of Islami Bank’s “anti-discrimination and bank’s interest-protecting banker society”, said in a statement on Monday that S Alam Group has taken Tk 650 billion from the bank through known and anonymous persons. More than 10,000 people have been recruited but many of whom are unqualified.”
The statement further said that S Alam Group is still trying to extract money from the bank in various ways. At the same time, some officials are trying to remove loan documents and delete data involving the group.
That is why Abu Walid Chowdhury demanded that the board of directors of Islami Bank be dissolved quickly and a new board formed. He also demanded that S Alam be brought to book.
Besides the bankers from Patia area, managing director Monirul Moula, additional managing directors JQM Habibullah and Altaf Hussain, deputy managing directors Akiz Uddin, Miftah Uddin and other pro-S Alam Group senior officials did not go to the bank Tuesday.
Other officials demanded their expulsion.
Almost all the top officials and department heads of the bank were either from Chattogram region or were in charge of different branches of Chattogram. Saiful Alam even appointed his personal officer as DMD of the bank.
Asked how the seven banks owned by S Alam Group have been running despite having no money in their current accounts, Bangladesh Bank spokesperson Mezbaul Haque did not give a direct answer at a press conference last week.
He said all this now depends on the interim government. They will follow the instructions.
Economist Ahsan H Mansur said that the ownership of the bank should be given to someone else.
He, however, doubted whether anyone will agree to take this bank as the real value of the bank’s assets has become negative.
He said the former governor of Bangladesh Bank kept the bank afloat by printing money without taking any action. He should also be brought under punishment. A decision should be made about Islami Bank after discussion and review so that no crack appears in the confidence of the depositors.
* The report, originally published in the print and online editions of Prothom Alo, has been rewritten in English by Shameem Reza, Galib Ashraf and Misbahul Haque