Now Islami Bank is found playing with people`s money

NOW it is the country’s newly-formed Board of Islami Bank Bangladesh that has been reported to approve loans to a number of clients without following the due course of actions. The new Board of the country’s biggest Shariah-based bank , and also one of the 1,000 globally ranked bank took the charge in early January following a major controversial reshuffle in its key positions, and since then a number of its loan approvals have appeared more than just questionable. Markedly, two incidents of dubiously approved loans have caught our attention in recent times – first, the Board’s approval of loans worth Tk 16.75 crore to two clients – JN Flour Mills and its associate organisation , and on the second incident the bank’s board reportedly approved loan for a Bricks manufacturer without any knowledge and verification about the creditworthiness of the borrower.

Additionally, the same Board also gave a nod to a loan proposal to lend Tk 132.60 crore to a steel company. The company is a new client and the loan was provided to build a steel sheet manufacturing plant. This loan proposal too, did not include any information about the client’s banking activities. According to BB, the Board approved such a large amount of loan quickly to a completely new client without carrying out any field visit to the project site. How could the bank’s Board of Directors approve such a huge amount without carrying out any field visit?

However, from the sequence of events it appears, as if, public money stored in our banks have no value whatsoever. Moreover, the banks which were supposed to guarantee the security and proper handling of public money have become the most unsafe ones.

To get a closer look to the worsening situation, a BB report published barely couple of months ago suggests that, a total 9.23 percent of the outstanding loans in the banking sector are in default. On the last day of 2016, this amounted to Taka 62 thousand 632 crore. Rather mysteriously, in about one year, default loans have increased by nearly 11 thousand crore.

We fail to comprehend, why the government is repeatedly failing to address this shocking rise of corruption within the banking sector? Why so many Boards of Directors have become overnight accomplices of the defaulter syndicate?

There is a general perception that the Central Bank is unable to probe into these irregularities due to political intervention.

According to SAM, a certain Bangladesh business conglomerate – well-known for its powerful political standing – has about Taka 68 thousand crore in loans. This conglomerate has been alleged to directly or indirectly control some 10 banks and financial institutions in the country. A few months ago the members of this conglomerate quietly took over the major private bank of the country too. The Directors of the bank are representatives or selected persons of this group. The group is in control of the bank’s Board of Directors and all its committees. The management committee which was to scrutinize the loan proposals has been abolished. The group has its eyes on the bank’s huge investible funds. A few other groups, alongwith them are in the process of extracting massive sums from the bank as loans.

Needless to mention, which bank we are talking about, but despite repeated warnings and back-to-back scandals – our banking sector is fast losing all its credibility. We are worried.