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Cenbank Revamps Boards of S Alam Group-Controlled Banks to Curb Influence
The Bangladesh Bank took decisive action yesterday by reconstituting the boards of directors for two banks under the control of the Chattogram-based S Alam Group. Additionally, the central bank announced plans to restructure the boards of two other banks by next week to reduce the group’s dominant influence.
In a move to ease banking operations, the central bank also assured the business community that it would soon lift the restrictions on opening letters of credit (LCs) imposed on these banks.
In a related development, the newly reformed board of Islami Bank Bangladesh has initiated a comprehensive re-audit of all loans issued since the S Alam Group gained control of the bank.
The central bank has appointed five-member boards for both Global Islami Bank and Union Bank. Nurul Amin, former managing director of Meghna Bank, will chair the Global Islami Bank board, while Fariduddin Ahmed, former managing director of Islami Bank, will head the board of Union Bank.
Bangladesh Bank has stated that the boards of First Security Islami Bank and Bangladesh Commerce Bank will undergo restructuring within a week.
Moreover, the central bank restructured the board of United Commercial Bank (UCB), appointing notable figures including former Bangladesh Bank executive director Sajjad Hossain, former Agrani Bank deputy managing director Md Yusuf Ali, and chartered accountant Obaidur Rahman FCA. Shareholder directors Sharif Zahir and Md Tanvir Khan were also appointed, contingent upon their resignation from positions on the boards of National Finance and Eastland Insurance Company, respectively.
Earlier last week, the central bank reconstituted Islami Bank’s board, liberating it from S Alam Group’s control.
The new board members of Global Islami Bank include former Bangladesh Bank executive director Jamal Mollah, former Islami Bank deputy managing director Nurul Islam Khalifa, Dhaka University professor Abu Hena Reza Hassan, and chartered accountant Mahmud Hossain. The new Union Bank board includes former Bangladesh Bank executive director Humayun Kabir, former RAKUB deputy managing director Saiful Islam, Dhaka University professor Shahidul Islam Jahid, and chartered accountant Sheikh Jahidul Islam. All have been appointed as independent directors, according to official circulars issued by the central bank.
In an emergency meeting with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Bank Governor Ahsan H Mansur announced the restructuring of banks associated with S Alam Group.
Following the meeting, BGMEA Senior Vice-President Abdullah Hill Rakib shared that the central bank had agreed to launch a Tk3,000 crore soft loan package and continue Export Development Fund (EDF) activities, with a prompt resolution of the LC issues for the six affected banks.
Several meeting participants confirmed that the central bank would maintain the EDF and provide regular loans from the existing $3 billion fund. This follows a week after the Bangladesh Bank suspended LC operations at six S Alam Group-controlled banks due to corruption and irregularities, halting related import and export activities.
BGMEA leaders emphasized the detrimental impact of recent civil unrest on the garment sector and urged the central bank to support sustained export flow and global competitiveness.
Audit of Islami Bank Loans
In the first meeting of the newly restructured board of Islami Bank, a decision was made to re-audit all loans issued during S Alam Group’s control of the bank. An official present at the meeting stated, “We will scrutinize who received loans over the past seven years and the processes involved, with the goal of verifying collateral adequacy.”
Last week, the Bangladesh Bank dissolved the S Alam Group-controlled board of Islami Bank, appointing five independent directors in its place. Alongside loan audits, the board will review the bank’s Treasury Department investments, including those in money markets and foreign currencies.
The board will also evaluate recruitment practices from the past seven and a half years. Three external auditors will be appointed to assist in these reviews.
Before S Alam Group fully assumed control of Islami Bank on January 5, 2017, the group already had a loan exposure of approximately Tk4,000 crore with the bank’s Khatunganj branch in Chattogram. Post-takeover, the group’s borrowing from Islami Bank surged significantly.
Half of Islami Bank’s Loans Tied to S Alam Group
As of August 18, 2024, Islami Bank’s total loan portfolio stands at Tk1.5 lakh crore, with deposits totaling Tk1,53,274 crore. Of these loans, Tk74,972 crore—roughly half—has been traced back to S Alam Group, with Tk14,427 crore directly under the names of seven S Alam Group companies, according to central bank sources and Islami Bank documents.
Dhaka Stock Market DSE, Bourse on the last working day of the week, 12th September, ended with a mixed performance in Indices and hike in Turnover from the previous working session. This information is known from DSE sources.
733 crore 39 lakh taka shares were traded on this day. 108 crore 23 lakh more tradings were done in DSE today compared to the previous workday, 11th September, Shares worth Tk 625 crores 15 lakh shares were traded last time, Wednesday.
The benchmark DSEX added 12.55 points or 5,726 The Shariah-based index DSES gained 4.76 points or 1,245 and the blue-chip index DS30 decreased by 7.05 points or 2,100.
Of the issues traded, 158 advanced, 181 declined and 58 remained unchanged.
Paper Processing & Packaging Limited ranked top gainer on DSE, the share price increased by Tk 12.80 paisa or 9.98 percent. On this day, the share was last traded at Tk 141.00 paisa.
Confidence Cement PLC ranked top loser on the DSE, the share price dropped by Tk -5.00 paisa or 6.82 percent. On this day, the share was last traded at Tk 68.30 paisa.
DSE topped on trade is Linde Bangladesh Limited 61 crore 65 lakh takas of company shares have been traded.
A total of 31 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 41 lakh 19 thousand 413 shares of the companies were traded. The financial value of which is 54 crore 78 lakh taka.
The Financial Institutions Division (FID) under the Ministry of Finance has decided to terminate ATM Tariquzzaman from his role as commissioner at the Bangladesh Securities and Exchange Commission (BSEC). According to an official FID order issued on Wednesday (11 September), he will receive a three-month notice before his dismissal, with his tenure ending on 10 December.
Tariquzzaman had only been appointed as BSEC commissioner on 8 May, following his resignation as Executive Director of the commission. In September 2023, he briefly served as Managing Director of Dhaka Stock Exchange (DSE) before stepping down to take the BSEC role.
The development comes in the wake of the fall of the Hasina-led government on 5 August, after which BSEC Chairman Shibli Rubayat Ul Islam, along with Commissioners Shaikh Shamsuddin Ahmed and Rubana Islam, resigned. However, Tariquzzaman and fellow Commissioner Mohsin Chowdhury chose not to relinquish their positions.
In response, the interim government appointed Khondoker Rashed Maqsood as BSEC chairman, with Ali Akbar and Farzana Lalarukh joining as commissioners.
The political transition also triggered upheaval in the Dhaka Stock Exchange. According to BSEC and DSE sources, seven independent directors of the DSE resigned following the fall of the previous government, creating legal complications for the commission in selecting replacements. The BSEC disregarded the DSE’s recommendations and on 1 September appointed independent directors unilaterally, sparking discontent among DSE shareholders who viewed the decision as arbitrary.
Sources indicated that ATM Tariquzzaman had played a significant role in BSEC’s decision-making, which included appointing independent directors KAM Majedur Rahman, Helal Uddin, and Nahid Hossain—all of whom faced allegations of conflicts of interest. Majedur and Helal were accused of having ties to brokerage houses, while Nahid Hossain, as Additional Secretary of the Financial Institutions Division, was deemed ineligible under the law to serve as an independent director. Majedur Rahman has since refused the position.
The DSE Brokers Association expressed concerns in a letter dated 5 September, accusing the BSEC of making “anti-investor, non-transparent, and self-serving” decisions, leading to instability in the capital market. The association called for a revision of the selection process for appointing independent directors, urging the invocation of Clause 24 of the Demutualisation Act 2013 to form a Nomination and Remuneration Committee with four elected DSE directors to recommend candidates for BSEC’s approval.
Dhaka Stock Market DSE, Bourse on the fourth working day of the week, 11th September, ended with a mixed performance in Indices and hike in Turnover from the previous working session. This information is known from DSE sources.
625 crore 15 lakh taka shares were traded on this day. 62 crore 43 lakh more tradings were done in DSE today compared to the previous workday, 10th September, Shares worth Tk 562 crores 72 lakh shares were traded last time, Wednesday.
The benchmark DSEX added 11.12 points or 5,713 The Shariah-based index DSES gained 5.56 points or 1,240 and the blue-chip index DS30 decreased by 6.92 points or 2,107.
Of the issues traded, 64 advanced, 289 declined and 44 remained unchanged.
Shinepukur Ceramics Limited ranked top gainer on DSE, the share price increased by Tk 1.60 paisa or 10.00 percent. On this day, the share was last traded at Tk 17.60 paisa.
Prime Textile Spinning Mills Limited ranked top loser on the DSE, the share price dropped by Tk 1.50 paisa or 9.32 percent. On this day, the share was last traded at Tk 14.80 paisa.
DSE topped on trade is Agni Systems Limited 32 crore takas of company shares have been traded.
A total of 33 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 1 crore 10 lakh 62 thousand 781 shares of the companies were traded. The financial value of which is 36 crore 38 lakh taka.
