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As trust issues are plaguing Shariah-based Islami banks thanks to allegations of irregularities in lending, Bangladesh Bank has instructed five such banks to send daily updates on loan disbursements and collections of Tk10 crore and/or higher.
The central bank Bangladesh Bank has taken this decision as part of its hands-on supervision.
The banks are Islami Bank Bangladesh Ltd (IBBL), Social Islami Bank (SIBL), First Security Islami Bank (FSIBL), Global Islami Bank and Union Bank.
Governor Abdur Rouf Talukder issued a set of instructions in a meeting on Thursday with all the observers and coordinators appointed to the banks in the country.
Regarding such strict instructions came from the central bank Bangladesh Bank spokesperson Mazbaul Haque said the central bank regularly asks for information from the banks.
He said the directives to the five Islami banks — brought under monitoring following anomalies in their loan disbursements — was part of the central bank’s routine tasks.
Besides, the central bank also asked Social Islami Bank and Global Islami Bank not to disburse loans of Tk50 crore and above.
Regarding the matter, Zafar Alam managing director of Social Islami Bank Ltd said: “We will proceed in accordance with the central bank instruction. Besides, we will now focus on giving small loans to SMEs. The default rate of these loans is very low and the recovery is also good.”
Previous steps
Due to a cash crunch, the five Islami banks borrowed Tk3,995 crore from the Bangladesh Bank on December 6.
The next day, two banks took another loan of Tk1,252 crore.
Although Mohammed Monirul Moula, managing director and CEO of Islami Bank Bangladesh Ltd, claimed earlier that the depositors started withdrawing money due to various campaigns initially, it had now stopped.
It has been informed that on December 7, IBBL already repaid Tk590 crore of its loan taken from the central bank.
On December 12, the central bank appointed new observers to Islami Bank and First Security Islami Bank along with the seven public and private banks, which have recently come under fire for loan irregularities.
According to the central bank, its forex reserve and treasury management department director Abul Kalam will serve as the observer to Islami Bank, while payment systems department director Motasim Billah will serve the post at First Security Islami Bank.
Later, when the situation improved, the observer would be withdrawn.
Meanwhile, on December 4, the High Court ordered the authorities concerned to probe into the much talked about and reported “loan scam” in three banks — Islami Bank, Social Islami Bank Ltd and First Security Islami Bank — and submit the report within the next four months or April 5.
(DT)
