The immediate cause has steamed from loan irregularities to the tune of over Tk 1400 crore to business houses affiliated to the big Chittagong business group without enough collateral and proper approval of the Board. The meagre dividend declaration to bank’s shareholders this year by Board Chairman representing the said business group to force others to sell their shares and interference in the routine management of the bank and its loan operations also has been blamed for the unrest.
We are afraid the growing instability which saw the removal of one of its two vice-chairmen on Tuesday and left several other directors furious over the loan irregularities and bank mismanagement may cause big setback to the bank. Earlier seven directors out of 19 threatened to resign. It is not clear what course of action they may take in the new situation that may intensify the fight for the control of the bank.
It is sad that a highly successful and well-established bank with global rating is facing uncertainty and it is surprising why the Finance Minister in a comment made it clear that the government will not interfere in the matter. We don’t know why the Finance Ministry wants to keep away when such a big bank may face bigger setback.
Islami Bank was set up in 1983 with nearly 70 percent of its sponsorship coming from the Middle East countries. It has grown three-fold every five years and has over one crore depositors, besides handling about 30 percent of Bangladesh’s remittances. The bank has financed almost one in every four textile and garment factories in the country to show its unique position in the national economy.
The biggest concern is now about the safety of hundreds and thousands of depositors’ money when the new management is sanctioning loans to controversial companies without enough collateral and whether the bank may continue its leadership to financing trade and investment in the future without control of its resources by the vested interest group.
A Middle East investment house will hold the lone post of vice-chairman now away from the country at a time they are also contemplating to sell larger part of their shares in the new situation where they have no control over their resources. The offering of “meagre dividend” to shareholders to force them to sell their shares in a free fall in share prices and buy it for big business group is causing new destabilization in the bank as observers believe it is just a drive to further consolidate the group’s control over the bank. It has earlier set up six companies overnight to buy 14.2 percent shares and take control of the Board.
