Cenbank dissolves SIBL board
Five-member board formed to oversee the bank’s operations
The Bangladesh Bank has dissolved the board of directors of the Social Islami Bank Limited (SIBL) and formed a new five-member board.
The central bank's banking regulations and policy department announced the decision yesterday in a letter addressed to the managing director of SIBL.
The new board has one director — Major (retd) Dr Md Rezaul Haque, the bank's founding shareholder — and four independent directors — Maksuda Begum, a former executive director of the Bangladesh Bank; M Sadiqul Islam, a professor at the Department of Finance of Dhaka University; Md Morshed Alam Khandkar, a former deputy managing director of Rupali Bank; and Md Anwar Hossain, a chartered accountant.
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SIBL had been under the control of S Alam Group, a business conglomerate with a history of alleged irregularities and corruption, since 2017.
S Alam Group is alleged to have engaged in irregularities and corrupt practices within SIBL, particularly in the areas of recruitment and loan disbursement.
Following the allegations, the Bangladesh Bank dissolved the existing board of directors, which was dominated by S Alam Group representatives, and appointed a new board to oversee the bank's operations.
Last week, the central bank reconstituted the board of Islami Bank Bangladesh to free it from S Alam Group's control.
According to a confidential Bangladesh Bank report, Social Islami Bank concealed Tk7,936 crore in defaulted loans with the help of a central bank official.
According to the inspection report, the defaulted loans at the end of December 2023 amounted to Tk9,568 crore, but SIBL reported only Tk1,644 crore to the money market regulator.
The inspection team identified discrepancies in financial reporting by conducting on-site visits to five main branches, off-site reviews of 10 branches, and inspections of seven branches outside Dhaka as of 31 December 2023.
The central bank concealed the true financial state of SIBL, later reporting that the bank's total provisioning requirement was Tk1,370 crore, of which the bank had met Tk1,306 crore, leaving only a Tk64 crore shortfall.
The central bank's report noted that the banking sector was facing challenges due to a lack of sufficient foreign exchange for imports, efforts to protect the financial reputation of banks, the need to reduce LC margin costs, and global abnormal inflation.
