Social Islami Bank Limited (SIBL), with a budget of around Tk1.5 crore, intended to host its business conference at a hotel in Cox’s Bazar despite having a serious cash situation. The central bank, however, ordered that the conference be held in Dhaka at a reduced cost after assessing the bank’s financial status.
Following the board’s decision, the bank applied to the central bank on 8 December for approval to hold the event in the beach town. In its letter, SIBL announced plans to host the Annual Business Conference 2025 at Baywatch Hotel in Cox’s Bazar on December 17-18, with 270 participants. The cost of the conference was set at Tk1.10 crore, excluding VAT and taxes.
Under the cover of loans, SIBL had enabled S Alam Group to withdraw significant amounts of money, said an official from the central bank to The Business Standard. The bank has been maintaining a negative balance in its current account for a long period and has been struggling to return depositors’ money, added the official. “Despite this, the bank decided to spend nearly Tk1.5 crore on the conference including taxes, which the central bank deemed inappropriate. As a result, approval for the event in Cox’s Bazar was denied,” he said.
Social Islami Bank’s acting managing director, Nazmus Saadat, responded to The Business Standard by saying that they planned to hold the conference in Cox’s Bazar at a reasonable price. “The purpose of this early-year gathering was to motivate branch managers. We will reschedule the event in Dhaka, though, as the central bank has directed us to reduce expenses,” Saadat continued.
The Bangladesh Bank severed its connections with the S Alam Group and reorganized the board of Social Islami Bank in August of last year. Together with four independent directors, a new director was chosen from the group of shareholder-entrepreneurs. Top officials who were believed to have strong ties to S Alam Group resigned after the restructure. A liquidity issue is said to have resulted from serious financial irregularities that allowed money to be siphoned off after the bank was taken over by the S Alam Group in 2017.
Bangladesh Bank printed money to fund the bank for over two years. However, this support stopped once the Awami League administration fell, which caused the bank to have further liquidity problems and made it more difficult for it to compensate depositors. From August to October, Social Islami Bank had acute liquidity difficulties, despite the central bank’s involvement alleviating some of the burden. The bank let customers to withdraw up to Tk20,000 apiece by the second week of October, when things had somewhat improved.
Despite the central bank’s support for liquidity, Social Islami Bank’s current account and provisioning are still in deficit.
The bank was limited to a 5% rise in operating expenditures over the prior year as part of the requirements for borrowing money under the central bank’s guarantee program. The bank now holds a Tk4,000 crore loan backed by a number of instruments, as well as a Tk1,175 crore loan from the central bank under special liquidity assistance. Nonetheless, the bank has a Tk1,500 crore provisioning deficiency for non-performing loans and a Tk3,398 crore imbalance in its current account with the central bank. Nearly Tk300 crore in fines have resulted from the continued current account deficit.
Source: The Business Standard
