Dhaka, Aug 28 (V7N): The Bangladesh Bank has taken decisive action to reconstitute the boards of Global Islami Bank and Union Bank, previously controlled by S Alam Group, in an effort to remove the influence of the Chattogram-based business conglomerate. The central bank also plans to restructure two additional banks within the next week.

In addition to these changes, the central bank has assured the business community that the restrictions on opening letters of credit (LCs) at these banks will soon be lifted.

The newly reconstituted board of Islami Bank Bangladesh has announced plans to re-audit all loans disbursed since S Alam Group took control. This move comes as part of broader efforts to restore integrity and transparency within the bank.

The Bangladesh Bank has appointed new five-member boards for both Global Islami Bank and Union Bank. Nurul Amin, former Managing Director of Meghna Bank, will lead Global Islami Bank's board, while Fariduddin Ahmed, former Managing Director of Islami Bank, will chair the board for Union Bank.

The central bank has also announced plans to restructure the boards of First Security Islami Bank and Bangladesh Commerce Bank within the coming week.

In a related development, the board of United Commercial Bank (UCB) has been restructured. The new board members include former Bangladesh Bank Executive Director Sajjad Hossain, former Agrani Bank Deputy Managing Director Md Yusuf Ali, and Chartered Accountant Obaidur Rahman FCA.

Additionally, Sharif Zahir and Md Tanvir Khan have been appointed as shareholder directors, with the condition that they resign from their positions on the boards of National Finance and Eastland Insurance Company, respectively.

This restructuring follows the central bank's decision last week to dissolve the board of Islami Bank, removing it from S Alam Group's control.

During an emergency meeting with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Bank Governor Ahsan H Mansur confirmed the decision to restructure the banks under S Alam Group's control. The central bank also agreed to launch a Tk3,000 crore soft loan package and continue Export Development Fund (EDF) activities to support the garment sector.

This decision comes in response to the significant impact on the garment sector due to ongoing unrest in the country. The central bank had previously halted LC operations at six banks controlled by S Alam Group due to widespread corruption and irregularities, affecting the import and export activities of businesses associated with these banks.

Auditing Islami Bank Loans

In the first meeting of the newly reconstituted board of Islami Bank, it was decided to re-audit all loans issued during the tenure of S Alam Group. The audit aims to review the loans taken out over the past seven years, ensuring proper collateral and legitimacy.

This decision follows the Bangladesh Bank's dissolution of Islami Bank's board, which was previously under S Alam Group's control. The newly appointed independent directors will also review the bank's Treasury Department investments and recruitment processes from the past seven and a half years.

Before taking full control of Islami Bank in January 2017, S Alam Group already had a significant loan exposure at the bank's Khatunganj branch in Chattogram. Since the takeover, the group's borrowing from the bank has significantly increased.

Half of Islami Bank Loans Benefited S Alam Group

As of August 18, 2024, Islami Bank's total loan portfolio stands at Tk1.5 lakh crore, with total deposits amounting to Tk1,53,274 crore. Of these loans, Tk74,972 crore, or half of the total, has been identified as benefiting S Alam Group, with Tk14,427 crore directly under the name of seven S Alam Group companies.

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