Six S Alam-linked banks face lending restriction

The Bangladesh Bank has imposed restrictions on the lending activities of six Islamic banks linked to S Alam Group amid allegations of financial irregularities. 

The banks affected are Islami Bank Bangladesh, First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, and Bangladesh Commerce Bank.

Bangladesh Bank Executive Director and Spokesperson Md Mezbaul Haque confirmed that the central bank issued the directive via a letter to the concerned banks. Under the new restrictions, these banks are prohibited from disbursing any new loans, rescheduling existing loans, or opening new import letters of credit (LCs) until further notice.

However, these banks are allowed to continue offering agriculture loans, SME loans against deposits, and disbursements from incentive packages up to Tk 5 crore.

The move follows an earlier order from Bangladesh Bank that halted the encashment of checks amounting to Tk 1 crore or more issued by nine banks, including the six linked to S Alam Group. 

These banks have been struggling with financial difficulties, including challenges in maintaining their Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) with the central bank, as well as facing significant current account deficits.