Bangladesh Bank (BB) has announced plans to dissolve the board of Islami Bank, currently controlled by the controversial conglomerate, the S Alam Group, as part of its sweeping reforms to improve governance in the banking sector.
The central bank will also take over the shares of Islami Bank held by S Alam Group, in accordance with the law.
BB Governor Ahsan H Mansur revealed these decisions during a press conference on Wednesday, stating that the current board will be replaced by a smaller, government-assisted board, with an independent director to be appointed shortly.
Similar actions will be taken for other banks under S Alam Group's control, the BB governor confirmed as he, addressing the current situation, noted that former directors holding at least two per cent of the bank’s share capital would be reinstated to the board.
Ahsan made it clear that no defaulter of bank loans will be exempt from repayment. "We will take all necessary legal measures to recover the outstanding amounts. The management boards of weak banks will be dissolved, starting with the National Bank and a decision taken for the Islami Bank as well. The same actions will follow for other banks as well," he asserted.
When asked about the total loans owed by the S Alam Group, Mansur admitted, "We have yet to determine the exact amount, including both named and unnamed loans. While we do not have complete information on the undeclared loans, this data will be uncovered in due course."
Addressing concerns over the central bank's accountability in the loan irregularities, the governor emphasised, "These issues arose before I took office. I, however, am committed to preventing any future disruptions. My door is always open, and I will address any reasonable demands. However, I will not sign off on anything unreasonable. If it comes to that, my resignation letter will be submitted along with that signature."
Governor Mansur also declared that the state will take control of all shares linked to S Alam Group and its affiliated companies, amounting to 82% of the total. "If the S Alam Group settles all their outstanding dues, their shares will be released. If not, the shares will be adjusted accordingly," he explained.
This development comes amid unrest in the largest Shariah-based bank in Bangladesh following the significant political changeover earlier this month. Protesters demanded restructuring the board and removal of the top management of Islami Bank, taken over in 2017 by the S Alam Group Chairman Mohammed Saiful Alam, his family members and the group's associated entities, under the patronage of the fallen Awami League government.
Currently, the banks under S Alam Group's grip include Islami Bank Bangladesh, First Security Islami Bank, Al-Arafah Islami Bank, Social Islami Bank, Global Islami Bank, Union Bank, and Bangladesh Commerce Bank.
Since the takeover of 2017, the S Alam Group has reportedly withdrawn Tk 75,000 crore from the Shariah-based bank through undisclosed channels.
Under the Bank Companies Act, a single individual, family, or group is legally allowed to own a maximum of 10 per cent of a bank's shares. However, after taking control of Islami Bank, the notorious S Alam Group acquired 81.92 per cent of the bank's shares, distributed across 24 institutions.
In response to these financial misconducts, the Bangladesh Securities and Exchange Commission (BSEC) has banned the transfer of shares under the holdings of S Alam Group.
