Bangladesh Bank on Monday appointed observers at Islami Bank Bangladesh Limited and First Security Islami Bank Limited following allegations of various irregularities in loan disbursement.
BB spokesperson and executive director Mezbaul Haque confirmed New Age the appointment of observers to the IBBL and FSIBL.
The BB appointed Forex Reserve and Treasury Management director Abul Kalam in Islami Bank and Payment Service department director Motasim Billah in First Security Islami Bank as observers, respectively, he said.
The observers will be on the board and look into the proceedings of the banks. If they find any irregularity, they will give an observation to the chairman of the board and also notify the central bank, he added.
The central bank usually appoints observers to banks whose financial health is not sound. The observer participates in board meetings and monitors the bank's operations.
With IBBL and FSIBL, nine banks now have BB-appointed observers.
On December 4, the High Court asked the government to hold inquiries into alleged loan irregularities in three private banks—Islami Bank Limited, First Security Islami Bank Bangladesh Limited, and Social Islami Bank Bangladesh Limited.
The three banks are under the control of the S Alam Group.
The court directed the chairman of S Alam Group to explain by April 5 the company’s position over the allegations, which were reported by New Age on November 30 under the headline ‘S Alam Group lifts Tk 30,000cr loans from IBBL alone’, by Protham Alo on November 24 under the headline ‘Islami Bank A Voyankar November’ (Terrible November in Islami Bank), and by the Daily Star on November 29 under the headline ‘TK 7,246CR loans to 9 firms: BB probing ‘breach of rules’ at Islami Bank.’
The High Court also directed the chairman of the Anti-Corruption Commission, the governor of Bangladesh Bank, the head of the Bangladesh Financial Intelligence Unit, and the Criminal Investigation Department to submit separate probe reports to the court within four months.
The court set April 5 for further hearing on the suo motu rule.
Earlier in 2010, the BB appointed an observer at Islami Bank on suspicion of irregularities and terror financing.
S Alam Group took over Islami Bank Bangladesh in 2017 after the government moved to oust people loyal to Bangladesh Jamaat-e-Islami from the bank.
In 2020, the BB withdrew its observer from the Islami Bank.
