Md Mehedi Hasan

Once a reputable private commercial lender, AB Bank’s financial health is now deteriorating gradually due to boardroom mismanagement, loan irregularities, illegal facilities availed by its sponsors and inaccurate measures by the central bank.

Social Islami Bank PLC stands out among crisis-hit banks with no “untraceable” loans, a factor that will catalyse its swift recovery, according to M Sadiqul Islam, the new chairman of the Shariah-based lender.

The Bangladesh Association of Banks (BAB), the private bank owners’ forum, will work with the central bank governor and the finance adviser to rejuvenate the banking sector, weakened under 15 years of Awami League rule, said its new chairman Abdul Hai Sarker.

The defaulted loan figure is set to double as the Bangladesh Bank is set to tighten the classification rules for all types of loans by March next year to meet the International Monetary Fund’s loan conditions.

Awami League-affiliated businesses had already put the country’s banking sector in trouble with huge bad debts, but the loans disbursed through irregularities to these companies turned sour even at a more alarming pace after the party’s ouster.

Despite an overall improvement in foreign currency stocks, some state-run banks and Shariah-based lenders are not making import payments on time, prompting the central bank to issue a notice and warn of punitive actions against bank officials.

A bank will not be able to do Islamic banking business along with conventional banking at the same time, according to the draft ‘Islami Bank Company Act-2024’, as the central bank looks to level the playing field for Shariah-based banks.

Private sector credit growth decelerated to the slowest pace in three years in September due to uncertainty in the investment environment following the recent political changeover.

Remittance inflow has continued to rise for the past few months, providing a breather for a country facing multiple challenges, including external payment pressures amid dwindling foreign exchange reserves.

A large chunk of a Tk 10,000 crore central bank fund, meant for financing raw material imports for export orders, remains stuck with four crisis-hit banks, according to Bangladesh Bank officials.

A “staffer of S Alam Group” took out Tk 118 crore from Union Bank without any approval or following any banking norms, indicating how the controversial business conglomerate used the bank.

While more than a dozen banks in Bangladesh are struggling to stay afloat, Pubali Bank, which has emerged as one of the leading private commercial lenders, stands as a glowing example of how to traverse difficult times.

The volume of cash outside the banking sector of Bangladesh has been increasing since the start of the year due to persistent inflation, the loss of consumer confidence in the sector due to the presence of ailing lenders, and the prevailing situation following the recent political changeover.

Sixteen non-bank financial institutions (NBFIs) faced a combined provision shortfall of Tk 1,954 crore till June this year, reflecting that their financial health had worsened.

As crisis-hit lenders have started getting liquidity support from the inter-bank money market, they are now repaying depositors for specific purposes, such as medical emergencies, and in the case of salary disbursement or remittance encashment.

EkPay, an e-payment system of the Aspire to Innovate (a2i) programme of the government, has been offering all types of payment services without obtaining a licence from the Bangladesh Bank (BB), which is in clear violation of the Payment and Settlement System Act-2024.

Non-bank financial institutions (NBFIs) in the past fiscal year saw their defaulted loans reach a record 33.15 percent of all disbursed loans, according to the central bank, indicating a fragile situation in the sector thanks to widespread loan irregularities and scams.

About $809 million has piled up in a Bangladesh Bank escrow account to repay loans and interest for the Russia-funded Rooppur Nuclear Power Plant.

S Alam Group and its linked companies account for more than 86 percent of the disbursed loans of Global Islami Bank (GIB), one of the six Shariah-based lenders that were controlled by the Chattogram-based business giant.

S Alam Group’s takeover of the Islami Bank to drain the healthiest bank of the country had left investors and customers in shock. It did not stop there.