Photo: Collected
Bangladesh Bank has imposed restrictions on six Islamic banks under the control of S. Alam Group, preventing them from distributing new loans or opening import Letters of Credit (LCs).
The affected banks are Islami Bank Bangladesh, Social Islami Bank, First Security Islami Bank, Union Bank, Global Islami Bank, and Bangladesh Commerce Bank.
A reliable source within the central bank confirmed the information. A senior official, requesting anonymity, stated that these banks would not be allowed to distribute new loans or renew existing ones until further notice. Additionally, they will be prohibited from opening new import LCs.
Last week, the central bank also instructed these six banks, along with three others owned by S. Alam Group, to halt the cashing of checks worth Tk 10 million or more through their own or other banks.
The restrictions are part of an effort by the central bank to reduce the influence of the Chattogram-based S. Alam Group and curb their borrowing practices. The group is alleged to have direct ties with the deposed Prime Minister Sheikh Hasina.
A senior central bank official mentioned to the media that these banks have been struggling financially for a long time due to loans given under false identities, which has led to their current crisis. Despite this, former governor Abdur Rouf Talukder reportedly provided them with regular funds from the central bank's vault.
According to a recent report by the Bangladesh Bank, on June 30, under the governor’s approval, the central bank provided liquidity support of Tk 350 billion to the Islamic banks influenced by S. Alam Group in a single day.
The report also mentioned that after the change in government, an attempt was made to withdraw Tk 8.89 billion from Islami Bank through a paper-based company, which was blocked by the bank.
All nine banks, including the eight controlled by S. Alam Group, are currently facing severe financial crises. These banks have been struggling to maintain their Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) with the central bank, and they also have significant deficits in their current accounts.
A central bank official explained that these banks' deficits have worsened because they have issued more loans than their deposits can support. He added that the central bank has been lending to these banks without collateral and keeping their transaction accounts active, which has allowed them to continue issuing new loans.
Meanwhile, the National Board of Revenue (NBR) has summoned the accounts of members of the S. Alam family held in various banks and financial institutions, along with details of their credit cards. The NBR has also requested information on accounts held with financial institutions, the National Savings Directorate, and the postal department.
The S. Alam Group has been accused of various unethical practices, including money laundering, and was one of the major beneficiaries during the tenure of the recently ousted government.
Messenger/Shahed
