In Bangladesh, 10 fully-fledged Islamic banks operate within a banking industry dominated by conventional lenders. However, what’s particularly intriguing is the influence of Saiful Alam Masud, chairman of S Alam Group, over six of these banks.

While Islamic banks make up only 16% of the country’s total banking sector, they punch well above their weight.

According to the Bangladesh Bank’s latest financial stability report, by the end of March 2024, these banks held a 26.33% share of deposits and accounted for 28.24% of total investments in the banking industry.

In addition, these 10 Islamic banks processed over 37% of the country’s remittances during the January-March period of the current fiscal year.

Among them, Islami Bank Bangladesh, which has been fully controlled by S Alam Group for the past seven and a half years, stands out. It alone manages more than one-third of the Islamic banks’ deposits, loans, and remittances.

When combined with Al-Arafah Islami Bank, First Security Islami Bank, Social Islami Bank, Global Islami Bank, and Union Bank – the conglomerate’s stakes in Bangladesh’s Islamic banking industry exceed two-thirds.

For example, as of the end of March this year, the total deposits in the Islamic banking system amounted to Tk439,465 crore. Of this, over 70% were held by six banks either fully or partially controlled by S Alam.

Similarly, these six banks accounted for over 72% of all investments (lending) made by Islamic banks in the country.

S Alam’s journey in Shariah banking began in the early 2000s when he took full control of the First Security Islami Bank and acquired stakes in Al-Arafah Islami Bank.

His influence expanded further in 2013 when he secured licences for NRB Global Bank and Union Bank as conventional banks.

Using his considerable influence, Masud later converted these banks into Islamic ones, even when the Bangladesh Bank was strict about allowing new Shariah-based banks.

His foothold in the industry was solidified in 2017 when he took over Islami Bank Bangladesh and Social Islami Bank Limited (SIBL).

But what drives Saiful Alam Masud’s deep interest in Islamic banking? Does his passion stem from a personal adherence to Shariah principles?

The answers lie in the unique advantages Islamic banking offers in a predominantly Muslim country like Bangladesh.

Many people prefer Shariah-compliant banks as they wish to avoid interest, which is prohibited in Islam. Hence, these banks attract a large number of depositors who seek to adhere to religious principles.

Insiders in the Islamic banking industry reveal that, except for a few branches in Dhaka and Chattogram, most branches of S Alam-controlled banks are directed to focus exclusively on collecting deposits, with no loan disbursements.

This strategy aligns with a crucial advantage Islamic banks have over conventional ones: while conventional banks can lend up to 87% of their deposits, Islamic banks are permitted to lend up to 92%.

This 5% difference means that for every Tk100 in deposits, an Islamic bank can invest an additional Tk5 compared to its conventional counterparts.

IBBL’s data supports this observation. According to its annual report, the bank’s investment-deposit ratio (IDR) surged to 91.90% in 2023, nearly reaching the regulatory ceiling of 92%.

Before S Alam Group took over in 2017, the bank’s IDR was consistently below 90%—at 86.43% in 2016, 83.59% in 2015, and 79.88% in 2014.

However, the central bank’s latest financial stability report presents an even more concerning picture for Islamic banks in the country.

It revealed that the average IDR for 10 full-fledged Islamic banks (six controlled by S Alam) was 99%, indicating that Tk99 was invested for every Tk100 deposited, significantly exceeding the 92% regulatory ceiling.

“This higher lending capacity, combined with the religious appeal of Shariah-compliant banking, has fuelled S Alam’s deep involvement in the sector,” said a senior official of IBBL.

S Alam and his family’s stakes in these banks:

Saiful Alam Masud, along with his family and associated firms, holds nearly 28% of the shares in First Security Bank, where he serves as chairman and his wife, Farzana Parveen, is a director. By acquiring nearly 30% of the shares in Islami Bank Bangladesh in 2016, Masud gained full control of the bank in January 2017. He later appointed his son, Ahsanul Alam, as chairman, with his daughter, Maimuna Khanam, and son-in-law, Belal Ahmed, serving as directors.

S Alam also owns over one-fifth of the shares in Social Islami Bank, which he acquired in 2017. Also, he and his family control nearly 30% of Global Islami Bank and around 70% of Union Bank, along with 5% of the shares in Al-Arafah Islami Bank. Masud’s siblings and other relatives also hold positions on the boards of these banks.

However, according to banking laws, no family is permitted to own more than 10% of the shares in a bank. Despite this, Bangladesh Bank has failed to enforce these regulations against the S Alam Group and its family members.

How S Alam turned these banks into cash cows:

According to a recent report by the news media, S Alam Group and its relatives withdrew over Tk45,000 crore from Islami Bank Bangladesh alone, with some reports suggesting the figure could be as high as Tk75,000 crore. Masud secured these loans in the name of S Alam Group, his relatives, and paper-based companies. The 2023 annual report of Islami Bank Bangladesh revealed that four companies owned by the group hold nearly Tk15,000 crore in loans from the bank.

Banking industry insiders estimate that S Alam Group’s total loans across various banks amount to at least Tk125,000 crore, with over Tk20,000 crore drawn from First Security Islami Bank where Masud has full control for over two decades.

Bangladesh Bank (BB) Governor Ahsan H Mansur has advised the public against purchasing properties from S Alam Group that do not have bank mortgages, as banks will refund depositors by selling these assets. During a press conference on 28 August, he stressed that any sale of such properties must follow legal procedures, and buyers may face legal challenges.

Governor Mansur also highlighted the gravity of the financial misconduct by S Alam Group, describing it as one of the most systematic bank looting operations he has seen globally. He indicated that a banking commission, which will include international experts and take cues from Sri Lanka’s experience, is expected to be formed within a month.

Regarding Islami Bank, the governor stated that the newly formed board has been instructed to submit a work plan within a week. He warned that the Bangladesh Bank will closely monitor the board’s actions and will not hesitate to make further changes if irregularities are detected.

Parvez Tamal, Chairman of NRB Commercial (NRBC) Bank, along with Adnan Imam, Chairman of the Executive Committee, are allegedly leading a series of irregularities, corruption, and financial misconduct within the bank. Their actions reportedly include exerting power, forming syndicates, and engaging in widespread misappropriation of funds. Several founders of the bank have formally lodged complaints with the central bank, accusing them of money laundering, loan fraud, and illegal loan distribution. These allegations were detailed in a letter sent to the Governor of Bangladesh Bank on August 10.

The accusations extend to share manipulation, takeover of customer companies, favoritism in banking operations, irregularities in appointing contractual officers, and commission-based activities. Reports suggest that favored officers have received excessive increments and promotions, while a network of financial corruption, involving senior management and several branch managers, has been established to sustain the ongoing malpractices.

Further allegations have surfaced that former Governor Abdur Rouf Talukder may also be linked to these activities. Despite these serious accusations, Parvez Tamal and Adnan Imam remain in their positions at NRBC Bank.

A special inspection report by the Financial Integrity and Customer Services Division (FICSD) of Bangladesh Bank has highlighted several irregularities, including the appointment of contractual officers through director-owned companies, unauthorized loan disbursement, commission-based loan distribution, share manipulation, illegal takeovers of customer companies, and non-compliance with the bank’s procurement and expenditure management policies. The report also accuses the board members of deliberately reducing the bank’s income and violating the central bank’s outsourcing policies. Additionally, the report points out a clear conflict of interest created by directors appointing bank officers on deputation to serve as CEOs of NRBC Management, which is owned by the directors themselves.

This information has come to light through sources familiar with the matter.

According to sources, inspection and special investigation reports conducted at various times by Bangladesh Bank and the Anti-Corruption Commission (ACC) have substantiated allegations of money laundering and other financial irregularities against Parvez Tamal, Chairman of NRBC Bank, and Adnan Imam, Chairman of the Executive Committee. Despite multiple reports published in the media, no actions have been taken against them. Rumors suggest that they have been able to carry out these illicit activities with the support of several high-ranking members of the Awami League government. The situation has caused considerable anxiety among shareholders and depositors.

Sources indicate that during NRBC Bank’s 40th board meeting on February 7, 2016, Parvez Tamal and Adnan Imam first made headlines when they entered the meeting with armed outsiders, allegedly to intimidate directors and assert control over the bank. This marked the beginning of a series of illegal loans distributed in favor of their own companies, disregarding Bangladesh Bank’s policies. They approved a total of 64 crore taka in loans, including 3 crore taka to Arnita Agro, 9 crore taka to Pubali Concentration, 19 crore taka to NES Trading, and 3 crore taka to Lanta Services.

Bangladesh Bank’s policies clearly state that an individual cannot hold top positions in both the bank and the management board simultaneously. However, Parvez Tamal disregarded these rules and served as both Chairman of NRBC Bank and NRBC Management. On February 19, 2019, during the bank’s 78th board meeting, a 60 crore taka composite credit facility was approved in favor of NRBC Management Limited, including 20 crore taka for an omnibus credit facility and 40 crore taka for lease finance. This loan approval violated the Bank Company Act of 1991 and Bangladesh Bank’s guidelines.

Moreover, Parvez Tamal and Adnan Imam appointed NRBC Bank’s regular officer, Lieutenant Commander (retd.) Farhad Sarkar, on deputation to their jointly owned NRBC Management Company. They also funded his foreign trip to California for 14 days under the guise of special training, which contradicts the bank’s interests.

Further allegations have surfaced against the Tamal-Adnan syndicate for conspiracy to seize customer companies, including taking control of the export-oriented sweater manufacturer, Ixora Apparels Limited. They are accused of embezzling billions of takas in loans and laundering foreign currency under the name of this company, with an ongoing case in the ACC. Beyond Ixora, they are also implicated in loan fraud and money laundering through 15 other garment export companies, involving over 2,000 crore taka.

In addition, the duo has been accused of share market manipulation, involving their family members in these activities. Parvez Tamal’s mother, brother, and other relatives are said to have managed bank accounts linked to these illegal activities.

It is known that Tamal and Adnan are also involved in the manipulation of the stock market. They also used family members for these tasks. In addition, the bank account of Parvez Tamal’s mother Umm Bilkis (Account No. 010131100005525), Syed Shabbir Ahmed’s brother’s bank account (Account No. 010131100005736), Syed Shabbir’s wife’s bank account Asma Rashid (Account No. 010131100005530), Parv Ej is Tamal’s younger brother Bank Account Syed Shoaib (Account No. 010131100005526), ​​Asif Iqbal’s Father’s Bank Account Abdur Rashid (Account No. 010131100005567), Asif Iqbal’s Mother’s Account Maqsuda Begum (Account No. 010131100005564), Asif Iqbal’s Wife’s Bank Account Takia Nishi (Account No 010131100005533), of Asif Iqbal Sister’s bank account Naima Sultana (Account No. 010131100005566) and (Account No. 010131100005522) are managed through Tamal and Adnan. They have manipulated shares and laundered money through these bank accounts opened anonymously. Bank officials Zafar Iqbal Hawladar, Zamir Uddin and Kamrul Hasan are also alleged to be involved in this.

In November 2016, the ACC confiscated 4 crore 70 lakh 1 thousand 886 shares belonging to ABM Abdul Mannan due to money laundering charges. Despite this, on October 31 last year, Parvez Tamal’s business partner, Shafiqul Alam, Adnan Imam’s wife, Nadia Momin Imam, and Mercantile Bank’s former chairman’s daughter, Rehnuma Ahsan, illegally purchased these shares in the block market, implicating Parvez Tamal, Adnan Imam, Managing Director Golam Awlia, and Company Secretary Ahsan Habib.

To further their interests, former Governor Abdur Rouf Talukder’s brother-in-law, Major (retd.) Ahsan Habib, was appointed as Vice President of NRBC Bank on a contractual basis, despite lacking banking experience. Seven months later, he was promoted to the crucial position of Company Secretary and, before completing a year in the role, his employment was regularized, followed by a promotion to Senior Vice President. Allegations suggest that this appointment was made to cover up the Tamal-Adnan syndicate’s misdeeds by influencing the Governor.

Despite extensive evidence of corruption and severe irregularities, including a recommendation to dissolve NRBC Bank’s board by Bangladesh Bank’s FICSD, no actions have been taken due to the former Governor’s involvement.

The duo is also accused of loan irregularities, including approving nearly 400 crore taka in loans to Reliable Builders, owned by Parvez Tamal’s business partner Shafiqul Alam, against a security deposit of just 3 crore taka, and 200 crore takato Fortune Shoes, which was used to buy a cricket team in the Bangladesh Premier League (BPL). Parvez Tamal allegedly holds shares in this team under a false name, and the current Chairman of NRBC Bank is accused of share manipulation and money laundering disguised as export trade.

Additionally, Parvez Tamal and his associate Russell Ahmed Liton are accused of setting up unauthorized sub-branches and distributing microcredit loans in violation of regulations through SKS Foundation. These activities allegedly generated substantial commissions for Tamal. They also allegedly profited from decorating and furnishing these sub-branches by awarding contracts to their benami companies, Lanta Services, TSN Trade and Infrastructure Development Limited, and NRBC Management Company, thereby increasing the bank’s expenses.

By December 2023, NRBC Bank had disbursed 3,300 crore taka in microcredit loans in partnership with SKS Foundation. The bank also provided 200 crore taka in loans for expanding the foundation’s business, including establishing resorts, hospitals, schools, and colleges, without adequate collateral. The Tamal-Adnan syndicate has frequently approved large loans for their own benefit through favoritism and misuse of power. Allegations of nepotism and irregularities have also been raised regarding the recruitment of trainee officers in April 2022.