Anisul Islam Noor :
In an unprecedented development Islami Bank Bangladesh Ltd (IBBL); which is by far the largest private sector bank in the country has ordered to stop all types of investment from Sunday due to dearth of liquidity in the bank, inside sources said.
Earlier, the bank had stopped all new investment by verbal order, but from Sunday
it has formally closed the central control switch to make sure that no investment funding will be disbursed from head office or any other office all over the country while new investment loan will be sanctioned.
As a result, branches could not release investment (loans) fund from Dhaka and its outside branches. Panic is gripping clients, investors and bank officials at all levels; as none knows for sure what is going on inside the bank. Insiders say this is indeed a dramatic turn never expected from this bank; which has symbolized business confidence in the banking sector above all others.
The move for closure of all investment comes immediately after the change of the chairman and heads of some sensitive banking committees last week while insides had said more changes in the board of directors are also on card.
The Islami Bank saw dramatic changes for the first time in January last year with the removal of the former chairman M A Mannan and reshuffling of other sensitive committees. Meanwhile massive transfer of the bank shares took place to change the ownership of the bank previously controlled by people linked with Jamaat political party.
The bank saw the change of the chairman again with removal of Asrastoo Khan last
week. It also followed reshuffles of important committees and its board of directors only to suggest big crisis within the bank particularly with regard of loan portfolio management resulting into liquidity crisis.
Media report over the past one year regularly said as several new companies set up overnight took control of the bank, its loans sanctioning and disbursement were made in flagrant violation of banking rules and standard procedures. It essentially resulted into the bank’s unprecedented liquidity crisis although it was sitting on the largest deposits of over Tk 80,000 crore one year ago.
Its current total deposits now amounts to Tk 76,495 crore The bank has an investment of Tk 77,869 crore up until now. Many fear that huge fund of the bank may have been exploited by new owners under various fake or controversial loans to hit the highest limit of mismanagement calling for drastic action like stopping new investment and disbursement to tackle liquidity crisis.
Islami Bank is not taking new investment projects for quite sometime. It was also disbursing money against already approved investment at slow pace; which became altogether stopped now from Sunday last.
Even the fixed investment for the bank’s own employees has been discontinued. Islami Bank’s popular ‘agent banking’ outlet has also been discontinued. Bangladesh Bank has approved 105 outlets of the Bank’s Agent Banking, of which 95 outlets have already started functioning. The bank has closed the opening of the new outlet now.
Earlier, the bank sought Bangladesh Bank’s approval for more than 200 ‘agent banking’ outlets recently.
Investments have been stopped to meet the crisis of cash and to fix the bank’s fixed deposit and investment ratio (IDR). However, the concerns of the banking industry can be reversed following such decision. Debashis Chakraborty, Executive Director and spokesman of Bangladesh Bank said
the bank has decided to stop invest in consideration of customer needs and other matters. “There is no direct mention of the Bangladesh Bank in this regard. The decision of the Board of Directors of the Islami Bank is important,” he said.
Concerned about the safety of the largest private sector bank of the country, the central bank says there is no logical reason for such a crisis. The bank has never had a financial crisis in this year. Last year it collected over 8 thousand crore deposits. Still no one can say anything about why this is so.
Insiders say the bank lent large amount of money to many big projects. Now these projects were facing setback and failing to go into production or regenerating income. As a result, both the customer and the bank are at a loss.
According to the guideline of the Bangladesh Bank, Islamic banks can distribute 85 percent of their deposits against loans. If the overall financial indicators are good, it can even lend 90 percent against various businesses.
Insiders of the bank requesting not to be name said many officials fear of losing jobs in this uncertain situation in the bank. It is not clear to anyone what is going on.
