BB decides to appoint observers at the two Islamic banks

Bangladesh Bank has decided to appoint observers at the Islami Bank Bangladesh Ltd (IBBL) and First Security Islami Bank (FSIBL), said a top official of the central bank.

The decision comes amid reports of allegations of irregularities in the disbursement of a large amount of loans in violation of banking rules in recent times.

Chattogram-based business entity S Alam Group has stakes in these two shariah-based banks and has representation on the boards.

The central bank usually appoints its high officials as observers at a bank when the financial health of the lender deteriorates due to financial scams. It has so far appointed observers at nine banks, along with the latest two, in order to restore corporate governance in the financial sector. 

On December 4, the High Court directed the authorities to probe the alleged loan scams at the IBBL, Social Islami Bank Ltd, and FSIBL.

The Anti-Corruption Commission, the Bangladesh Bank, the Bangladesh Financial Intelligence Unit, and the Criminal Investigation Department of Police have been asked to submit probe reports to the court by April 5.

If the allegations of loan scams are found to be true in the probes, the ACC, the BB, the BFIU, and the CID will have to inform the court about the actions taken against the persons involved in the scams.

The High Court asked S Alam Group to come up with explanations on the reports that it took Tk 30,000 crore from IBBL and to place relevant documents in this regard before the court.

The BB official said that the central bank is now carrying out investigations into the banks following the High Court's instruction.