S Alam Group halts operations following discussions on loan repayment

After taking control of Islami Bank Bangladesh, S Alam Group and its affiliated organizations borrowed around Tk 730 billion, which constitutes nearly 50% of the bank’s total loans.

Following the fall of the Awami League government, a new board of directors was appointed to Islami Bank. The new board began reviewing various projects linked to the group in Chattogram and Rajshahi, while initiating efforts to recover the loans.

The bank’s management committee also held an online meeting with S Alam Group’s Chairman, Mohammad Saiful Alam, to discuss loan repayment. However, Alam has not responded, and the loans are now at risk of default.

The S Alam Group, a prominent business conglomerate in Chattogram with strong ties to former Prime Minister Sheikh Hasina, took over Islami Bank in 2017. After the takeover, the group allegedly withdrew large sums of money anonymously, facilitated by changes in the bank’s board of directors and management.

Loans were also approved in the names of several entities connected to the group. After the fall of Sheikh Hasina's government, the central bank dissolved Islami Bank's board on August 22 and appointed a new one.

Former Bangladesh Bank Chief Economist Mustafa K. Mujeri told Prothom Alo that a resolution through discussion with the borrowers would have been preferable. “Since they took the money, they should have initiated repayment talks. However, their immense influence seems to make them immune to consequences. Now, it’s up to Bangladesh Bank and the government to figure out how to recover the funds,” he said.

Mujeri suggested that legal action to recover the loans could lead to significant delays. He recommended forming a special bench in the High Court to expedite the trial if a case is filed, adding that such a move would send a strong message to other defaulters.

Board of Directors Inspect Projects

After taking control, the new board of directors, led by Obayed Ullah Al-Masud, Chairman of Islami Bank, visited S Alam Group’s head office and various factories in Chattogram to address debt recovery. Despite the presence of senior officials from S Alam Group, no comments were made regarding the loans.

Documents reveal that S Alam Group borrowed Tk 561.18 billion directly from Islami Bank, with an additional Tk 75.24 billion acquired indirectly. These loans were disbursed through Islami Bank's Chattogram branches in Khatunganj, OR Nizam Road, Pahartali, and the Gulshan No. 1 branch in Dhaka.

While Islami Bank's policies limit loans to a single group at Tk 5 billion, S Alam Group far exceeded this cap.

Meeting with S Alam

Saiful Alam controlled Islami Bank for nearly eight years. Following instructions from the new board of directors, the bank’s Managing Director, Muhammad Munirul Maula, and other senior officials held an online meeting with Alam in early November. S Alam Group’s Chief Financial Officer, Subrata Kumar Bhowmik, was present at the meeting.

During the meeting, Islami Bank informed Saiful Alam that his direct and indirect loans from the bank amounted to approximately Tk 730 billion, with many loans nearing default. This increase in defaulted loans was exacerbating the bank’s liquidity crisis.

Saiful Alam was urged to repay Tk 100 billion immediately. In response, he requested time to continue his business operations, assuring that he would repay the loans under his name but claimed ignorance about other outstanding loans.

The bank proposed a compromise, offering to deposit Tk 20 for every Tk 100 repaid and issue a fresh loan of Tk 80, which they believed would allow the business to continue operating while slowly recovering the debt.

Despite this arrangement, the bank has received no response from the S Alam Group after nearly a month and a half. Bank officials report that most of the group’s loans are now in default.

Prothom Alo attempted to contact Saiful Alam and Subrata Kumar Bhowmik for comments but received no response.

Since the interim government assumed office, Islami Bank has begun to reflect the true state of its loan records, leading to a sharp rise in defaulted loans. In June, defaulted loans at Islami Bank stood at Tk 77.24 billion, and by September, this had surged to Tk 177.51 billion—an increase of Tk 100 billion in just three months.

Waiting for Audit Report

The new board of directors has tasked four audit firms with assessing the actual state of Islami Bank’s loans, beneficiaries, collateral values, and staff recruitment. These firms have stated that they will submit their final reports later this month, though interim reports have already highlighted loans totaling Tk 730 billion.

Officials involved in the matter have confirmed that Islami Bank believes S Alam Group is unlikely to repay the loans through regular channels. As a result, the authorities are now considering legal action to recover the debt and are awaiting the final reports from the audit firms to proceed.

Senior bank officials have stated that legal measures will include selling off assets owned by the S Alam Group. These assets reportedly include vast tracts of land in Dhaka, Chattogram, and Gazipur, a power plant, and shares in various factories and institutions.

The massive embezzlement by S Alam Group has been described as the largest financial scam in the country’s history. Sources within Islami Bank have revealed that significant violations of financial sector laws and regulations were committed to facilitate these loans.

The bank’s chairman and managing director were summoned for inquiries about the matter, but they failed to respond.