Islami Bank’s Tk 8,279cr stuck with four lenders, one NBFI

Already struggling on providing a huge amount of loans to S Alam Group, Islami Bank Bangladesh is now in uncertainty over getting back Tk 8,279 crore it had provided as liquidity support to four banks and one non-bank financial institution (NBFI). 
The four banks are First Security Islami Bank, Union Bank, Social Islami Bank and Global Islami Bank, and the NBFI is Aviva Finance. Alongside Islami Bank, these were also under the control of the Chattogram-based conglomerate.
Islami Bank, the largest bank in terms of deposits, used to provide funds to the five entities whenever they suffered liquidity shortages, according to industry people.
Of the liquidity support, Tk 3,043 crore was provided to First Security Islami Bank, Tk 2,982 crore to Union Bank, Tk 1,017 crore to Social Islami Bank, Tk 547 crore to Global Islami Bank and Tk 690 crore to Aviva Finance.
Islami Bank’s total loans amounted to over Tk 1.74 lakh crore at the end of June, according to the bank’s records.
Its deposits stood at Tk 153,456 crore as of last December.
Documents showed that between 2017 and June this year, the Chattogram-based conglomerate and its associated companies took Tk 74,900 crore, which is 47 percent of Islami’s total outstanding loans as of March.
However, after a meeting with Bangladesh Bank Governor Ahsan H Mansur yesterday, Islami Bank’s new Chairman Md Obayed Ullah Al Masud told journalists that S Alam Group has taken more than half of the total loans disbursed by Islami Bank Bangladesh.
S Alam Group’s control over Islami Bank ended on August 22 after seven years as Bangladesh Bank reconstituted its board alongside those of the aforementioned five entities.
The development came about after the Sheikh Hasina-led Awami League government was ousted on August 5 by a mass uprising.
In a statement on Thursday, the Shariah-based bank said the central bank withdrew all restrictions on Islami Bank, including one on opening letters of credit.
Depositors’ funds are fully protected at Islami Bank, as per the statement.
Mohammed Nurul Amin, chairman of Global Islami Bank, acknowledged that his bank has liabilities with Islami Bank. However, these liabilities were created due to irregularities of S Alam Group, he added.
“This (liability) is because of the ‘S Alam Model’, through which the influential business group took out huge amounts of money,” he said.
“Now we are trying to bring back people’s confidence and rebuild the bank. Those institutional deposits will be repaid later,” he added.
Islami Bank Chairman Md Obayed Ullah Al Masud and First Security Islami Bank Chairman Mohammad Abdul Mannan could not be immediately reached over phone for comment.