Social Islami Bank hid Tk 7,924 crore in bad loans

Social Islami Bank Ltd (SIBL) had Tk 9,568 crore in default loans at the end of 2023. The Shariah-based bank, however, showed only Tk 1,644 crore on its balance sheet based on clearance from the Bangladesh Bank (BB). 

SIBL, in which Chattogram-based S Alam Group holds a majority stake, hid Tk 7,924 crore of its default loans, according to an inspection by the central bank.

The lender kept only Tk 153 crore as provision against the loans whereas it was supposed to keep Tk 9,281 crore to protect the interests of depositors and shareholders.

Industry insiders alleged that two top officials of the central bank allowed the private bank to hide its defaulted loans. 

Zafar Alam, managing director and chief executive of SIBL, said the BB usually provides a privilege that enables banks to show lower bad loans than the actual amount. 

However, Alam said he did not know about the concealment of bad loans by his bank. "The amount of our default loans has declined significantly now," he added.

BB officials said they inspected the principal branch and other major branches to unearth the state of defaulted loans and provisions of banks. In the case of SIBL, official prepared the report after inspecting the documents of 10 branches.

Bangladesh Bank executive director and spokesperson Md Mezbaul Haque told The Daily Star today that some banks were generally getting deferral facilities, which are always kept hidden.

However, he added: "I don't know what happened in the case of SIBL. I will inform you after getting knowledge about the issue."

The concealment of bad loans came to the spotlight just a day after a group of employees of SIBL demanded the dissolution of the bank's board.

The officials appointed before the S Alam Group took over SIBL in 2017 placed their demands after forming a human chain in front of the National Press Club in Dhaka. 

They alleged that the S Alam Group had taken control of the bank in 2017 after taking the then board of directors hostage at gunpoint.

Since then, the group and its associates, with support from the recently ousted Awami League government, embezzled thousands of crores from the bank's stakeholders and laundered the money abroad, the demonstrators alleged.