Tk 80b of Islami Bank stuck in five other banks, institutions  

The S Alam Group has not limited itself in taking out money from Islami Bank as loans, but also looted the bank’s deposits from other banks under its control. In the aftermath, nearly Tk 80 billion of the bank is now stuck in five other banks, inflicting a biting liquidity crisis on it. 

The crisis began in 2017 when the Awami League government facilitated the transfer of ownership of Islami Bank to the S Alam Group using state machinery. In the following years, the business group allegedly secured nearly half of the bank’s total loans, and recruited around 10,000 officers in the bank from Patiya in Chattogram where it is based. 

These all dragged the bank into a severe crisis, while its service standard deteriorated significantly. The people are facing various issues to withdraw their deposits. 

Following the downfall of Awami League government on 5 August, Islami Bank officials launched a movement demanding that the bank be freed from the influence of the S Alam Group. Later, the banking sector regulator, Bangladesh Bank, dissolved the board of directors and restructured it with independent directors.

The Islami Bank has a deposit of around Tk 84.25 billion – either the form of term deposit or loan – in some other banks and financial institutions. The bank managed to recover some funds, while a large portion – estimated to be around 82.79 billion – has been stuck, according to the central bank and Islami Bank data. 

As of Monday, Tk 10.17 billion of Islami Bank was stuck in Social Islami Bank, while Tk 30.43 billion in First Security Islami Bank, Tk 29.82 billion in Union Bank, and Tk 5.47 billion was in Global Islami Bank. Also, Tk 6.9 billion was stuck in a non-bank financial institution called Aviva Finance. 

There are allegations that Islami Bank has failed to reclaim the funds, and is even struggling to collect profits. The central bank deregulated all these banks and financial institutions and set them free from the grip of S Alam Group.

Obayed Ullah Al Masud, current chairman of Islami Bank, said the S Alam Group took around Tk 880 billion from the bank, which is  more than half of its total funds. 

According to sources, S Alam Group initially did not take loans directly from Islami Bank after gaining its control. Instead, the group made the bank deposit around Tk 35 billion in First Security Islami Bank, Union Bank, and Global Islami Bank, all under its own control. 

Despite the initial three-month term of these deposits, Islami Bank did not receive the funds back even after a year. It led to an altercation between S Alam Group owner Saiful Alam and Islambi Bank chairman Arastoo Khan. He later resigned as the chairman on 26 April, 2018.

While talking to Prothom Alo, Arastoo Khan said, “I did not agree to commit irregularities in the deposit money even though I took over the charge of the bank as per the will of the highest level. The group took the money to another bank but did not return it. This is why I left the charge of the bank."