SIBL returns to normal business operations as liquidity improves
Tk900cr in liquidity support has been secured from four banks with Tk450cr already received, says board chairman
HIGHLIGHTS
- Tk500cr from revived bill payment collections
- Expedite litigations for loan recovery
- Highest priority to remittance senders
- Prioritise seamless reactivation of ATM and NPSB services
Private commercial Social Islami Bank Limited (SIBL) has significantly improved its liquidity situation, recovering nearly Tk800 crore in less than two months since the interim government took office in early August.
Moreover, the bank secured Tk900 crore in liquidity support from four other banks under a guarantee from the Bangladesh Bank, of which Tk450 crore has already been received as deposits.
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With these improvements, SIBL has resumed normal business operations on a limited scale, clearing small pay orders and cheques to restore customer confidence.
M Sadiqul Islam, the newly appointed chairman of the bank following the Bangladesh Bank's dissolution of the previous board on 25 August, came up with the overall financial situation of the bank at a view exchange meeting with journalists on Monday (7 October), held at SIBL's headquarters in the capital.
Detailing the improvement in the bank's liquidity situation, Sadiqul said, "Nine banks in Bangladesh are facing liquidity crises. The Bangladesh Bank, without printing money, has addressed this issue through alternative methods such as offering guarantees.
"So far, we have secured commitments of Tk900 crore from four banks against the central bank's guarantees, and of that, Tk450 crore has already been provided as liquidity or deposits."
"Moreover, several other banks have also promised to provide deposits," he added.
Sadiqul further mentioned that they have taken several strategic steps to strengthen the bank's liquidity situation.
"Firstly, the bank has reactivated temporarily suspended collection accounts with 18 organisations, including Desco, Titas, Palli Bidyut, BTCL, BRTA, DPDC and Wasa, among others," he said, adding that the bank expects to generate approximately Tk500 crore in cash through the collection of these bills, similar to previous periods.
"Secondly, we are honouring small pay orders and clearing cheques. For a limited period, we are allowing cash withdrawals over the counter up to a specified amount. We believe this will help restore confidence among our customers," Sadiqul said.
"We are also giving remittance customers the highest priority, reaching out to previous clients who used to send their hard-earned money through us and encouraging them to continue sending remittances through SIBL," he added.
"BEFTN and RTGS services will continue smoothly without any interruptions through SIBL, which we believe will help restore customer confidence.
"We have also prioritised the seamless reactivation of ATM and NPSB services to ensure uninterrupted access for our customers," Sadiqul further said.
Talking on loan recovery, the SIBL chairman said, "One of the best ways to increase liquidity is through recovery, and we have a comprehensive plan in this regard.
"From 5 August to 30 September, we have already recovered Tk794 crore from overdue and classified investments, which is encouraging given the challenging circumstances."
"In addition, our plan is to further intensify the recovery efforts from classified investments. We will expedite ongoing legal cases and reactivate stalled ones. Wwe will also take necessary actions to identify and address intentional defaulters," he added.
He further said, "We are actively pursuing the recovery of funds from certain ongoing projects funded by loans taken by S Alam Group, both under its name and through proxies, from SIBL. It is worth noting that we have already frozen the group's fixed-term deposit (Mudaraba Term Deposit Receipt – MTDR) accounts, amounting to around Tk250 crore, as part of this effort."
At the meeting, Mohammad Forkanullah, SIBL acting managing director, said the liquidity crisis, which escalated after S Alam Group took control of SIBL in 2017, intensified after the withdrawal of Tk2,000 crore in deposits in January this year, leading to a lack of confidence in the bank.
However, he stated that SIBL would be able to fully resume operations within the next one to two weeks as the liquidity situation has improved.
Forkanullah also noted that S Alam Group has Tk6,400 crore in direct and indirect loans with SIBL, which remain regular.
The group also holds Tk600 crore in fixed deposits at other financial institutions owned by them, the acting MD said, adding that of the fixed deposit amounts, Tk173 crore is with Aviva Finance, Tk150 crore with Union Bank and Tk100 crore with First Security Islami Bank.
He also said SIBL has been keeping regular contact with Saiful Alam Masud, chairman of S Alam Group regarding the recovery of the loans.
Bangladesh Bank dissolved the SIBL board in August, replacing it with a five-member team, including founding shareholder Major (retd) Dr Md Rezaul Haque 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.
S Alam Group, despite the changes, still holds a 47% stake in the bank.
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.
