The recovery of Social Islami Bank Limited (SIBL) continues to face significant obstacles, with fresh allegations pointing to long-standing governance failures, regulatory shortcomings, and controversial ownership changes that have undermined the bank’s stability over nearly a decade.
Speaking at a press conference held at the National Press Club, legal counsel for the bank’s founding chairman, Major (Retd.) Dr Rezaul Haque, presented a detailed account of what he described as the systematic decline of the institution. According to lawyer Mahmudul Hasan, the bank’s deterioration over the past seven to eight years cannot be attributed solely to internal mismanagement but must also be viewed in the context of wider institutional failures.
Central to the allegations is the role of the S Alam Group, which has been accused of exerting undue influence over the bank’s operations and contributing to its financial distress. However, Mr Hasan stressed that responsibility also lies with the Bangladesh Bank, which he claims failed to take timely and effective action despite being aware of irregularities within the institution.
The claims also extend to politically sensitive developments during the tenure of former Prime Minister Sheikh Hasina. It is alleged that key stakeholders were coerced into relinquishing ownership stakes under pressure, including being taken to intelligence offices and compelled to sign documents. At the time, those involved reportedly refrained from speaking out due to concerns for their personal safety.
Following the political transition on 5 August, stakeholders had anticipated that a new administration would facilitate reforms and enable the bank’s recovery. However, these expectations have reportedly not been realised. According to the statement, the tenure of former central bank governor Ahsan H Mansur was marked by a lack of cooperation that further impeded efforts to stabilise the bank.
Instead of reinstating experienced sponsor shareholders, management responsibilities were reportedly assigned to individuals lacking sufficient banking expertise. Over the past eighteen months, these administrators are said to have operated under strict regulatory directives rather than prioritising the bank’s long-term interests. As a result, SIBL continues to grapple with operational inefficiencies, mounting liabilities, and weakened financial performance.
Key Issues Highlighted in the SIBL Crisis
| Issue Category | Details |
|---|---|
| Duration of decline | Approximately 7–8 years |
| Regulatory concerns | Alleged inaction by Bangladesh Bank despite known irregularities |
| Business group involvement | Alleged role of S Alam Group |
| Governance structure | Replacement of sponsor shareholders with inexperienced administrators |
| Non-performing loans | High and increasing |
| Central bank borrowing | Significant dependence |
| Estimated recovery period | Up to 8 years |
| Investment interest | Interest from major industrial groups, including IDB-linked entities |
Mr Hasan further noted that, to date, no senior banking officials or regulators have been held accountable for the alleged misconduct, raising broader concerns about transparency and governance within the financial sector. He argued that without addressing past irregularities and ensuring accountability, meaningful reform would remain difficult to achieve.
Responding to questions from journalists, he acknowledged the scale of SIBL’s financial challenges, particularly its substantial volume of non-performing loans and reliance on liquidity support from the central bank. Given these constraints, he suggested that a realistic recovery strategy would require a long-term approach, potentially spanning up to eight years.
Despite these challenges, there are signs of potential recovery. According to the statement, several major industrial groups—including entities linked to the Islamic Development Bank—have expressed interest in investing in the bank. Such investment, he argued, could help restore stability without increasing reliance on monetary support from the central bank.
In a written statement, Major (Retd.) Dr Rezaul Haque strongly criticised the current management structure, alleging that decisions taken over the past eighteen months have further eroded the bank’s financial position. He claimed that shareholders had effectively been sidelined through mechanisms that rendered their holdings negligible, transferring the burden of alleged financial mismanagement onto ordinary investors.
He also urged the government to reconsider any plans to merge SIBL with other financial institutions, advocating instead for a restructuring process that would restore control to its original sponsor shareholders. According to him, experienced ownership could have significantly improved the bank’s performance if given the opportunity.
Concerns were also raised regarding the plight of depositors and business clients. Thousands of customers are reportedly still awaiting the return of their funds, while numerous businesses associated with the bank are facing severe financial strain. Some enterprises, he claimed, have been forced to shut down after being classified as defaulters and subsequently denied access to credit from other financial institutions.
Stakeholders have called on the government to intervene urgently by facilitating dialogue with the central bank and considering a structured investment plan aimed at reviving the institution. They have also expressed reservations about proposed legislative measures, including the Banking Regulation Act 2025, warning that such policies could further weaken the bank if not carefully implemented.
As the situation continues to evolve, the future of SIBL remains uncertain. Nevertheless, the allegations highlight deeper concerns about governance, regulatory oversight, and accountability within Bangladesh’s banking sector. Without decisive intervention and structural reform, restoring confidence in both the institution and the broader financial system may prove an enduring challenge.