BB gives Tk 22,000cr loan to 7 banks, 5 said to be controlled by S Alam group

  • January 1, 2024

The Bangladesh Bank through a special pathway has given loans amounting to Tk 22,000 crore to 7 crisis-hit commercial banks, including 5 Shariah-based banks. Those 5 Shariah-based banks which are Islami Bank Bangladesh, Social Islami Bank, First Security Islami Bank, Union Bank and Global Islami Bank are allegedly controlled by S Alam Group.

These emergency loans were also given to National Bank and Padma Bank.

The Bangladesh Bank recently changed the structure of the board of the National Bank because the bank’s finances and governance were getting worse. Bangladesh Bank officials said that the banks didn’t have enough protection for these loans, so they gave them three days to pay them back using promissory notes.

They said that the loans were given to fix shortfalls in the central bank’s current account and the central bank’s capital reserve ratios before the end of the year. Zahid Hussain, who used to be the head economist at the World Bank’s office in Dhaka, told New Age that the liquidity support could be used to make up for gaps in the CRR. He said it was not ideal that the BB kept bailing out these banks without making them stop doing wrong and get back the loans that weren’t being used. He said that the central bank has been sending the wrong message to the sector by helping out banks in trouble since December 2022 without fixing the problems that caused them in the first place.