Companies linked to the controversial S Alam Group took out 56 percent of the total disbursed loans of First Security Islami Bank (FSIB), one of six Shariah-based lenders controlled by the Chattogram-based business giant.
As of this September, the total loans of FSIB stood at Tk 60,272 crore, of which Tk 33,791 crore, or 56 percent, was taken by companies linked to S Alam Group, according to an internal inspection of the bank.
These loans were disbursed through 24 of FSIB's branches in Chattogram to over 100 trading companies linked to S Alam, according to bank officials involved in assessing the commercial lender's exposure to the business conglomerate.
Mohammed Saiful Alam, chairman of S Alam Group, who was close to deposed prime minister Sheikh Hasina, was also chairman of the bank. After the fall of Hasina's government on August 5, the Bangladesh Bank reconstituted the boards of eleven banks, including FSIB.
Under the new board, the internal control and compliance division of the bank conducted the inspection from September 10 to 22.
The inspection team found huge irregularities in loan disbursement, including excessive investment violating rules, overvalued collateral, irregularities in loan rescheduling and classifying non-performing loans as regular.
The inspection report revealed that the bank's Tk 33,791 crore in loans from 24 Chattogram branches were disbursed through scams and irregularities, plunging the bank into deep financial trouble.
According to the report, these irregularities have led to massive financial losses and tarnished the reputation of the bank. It also eroded customer confidence.
The report added that all officials and stakeholders have been negatively impacted by these irregularities.
The 24 Chattogram branches are -- Jubilee Road, Anderkilla, Kadamtali, Pahartali, Fatehabad, Khatungonj, Hathazari, Khulshi, Rahattarpul, Halishahar, Bandartila, Dobashi, Kumira, Sadarghat, Chawkbazar, Prabartak More, Boalkhali, Mohra, Agrabad, Chandanaish, Patiya, Patiya Women's, Panchlaish and Bahaddarhat.
The inspection report showed that companies such as M/s Banijya Bitan, M/s Deluxe Trading Corporation, Eco Trade Corner, Globe Traders, Image Trade International, Abdul Awal & Sons, Murad Enterprise, Supreme Business Center, Momentum Business Center, Orchid International, Precious Trade Center, Royal Enterprise, Safran Trade International, Shah Amanat Traders, K Enterprise, Sagar Corporation and Minhaj Corporation received large volumes of loans from the bank.
The Chattogram-based S Alam Group and its affiliates obtained these loans through these trading companies and the loans remain unrecovered, the inspection team member added.
Most of the loans disbursed to these trading companies have now defaulted, contributing to the bank's overall default loan portfolio. As of this September, FSIB's defaulted loans stood at Tk 12,948 crore, up from Tk 2,015 crore a year earlier, according to central bank data.
In November, the bank's management identified 194 officials, including managers of the 24 Chattogram branches, with alleged involvement in loan irregularities linked to the S Alam Group. Subsequently, they were attached to the head office of the bank in the capital. Founded in 1985 by Mohammed Saiful Alam, S Alam Group has grown into one of the country's largest conglomerates.
