Chattogram-based business conglomerate S Alam Group took out around Tk 7,000 crore from Social Islami Bank, which is over 18 percent of the total outstanding loans of the cash-strapped commercial lender. 

Of the Tk 7,000 crore, the bank has identified that Tk 6,400 crore are funded loans, meaning which involved the direct transfer of cash, said Professor M Sadiqul Islam, the new chairman of the bank.

As of June this year, the total outstanding loan of the Shariah-based lender stood at Tk 37,285 crore, he told a views-exchange meeting with journalists at its head office yesterday.

Social Islami Bank is one of the six Shariah-based lenders that were controlled by the Chattogram-based business giant. The conglomerate took over the bank through coercion in 2017.

Following the political changeover in August, the central bank reconstituted the bank's board, freeing the lender from the grip of S Alam.

At the views-exchange meeting, the new chairman said there had been a lack of good governance at the bank and a huge amount of money was channelled out from the bank.

However, it is possible to recover S Alam loans as many projects of the group are still ongoing, believes Sadiqul Islam.

He said the bank holds Tk 250 crore in fixed depositsof the group, which has already been frozen.

Due to credit overexposure over the past few years, the bank is now facing a liquidity crisis, he said.

"We have signedagreements with four banks for around Tk 900 crore in liquidity support. Social Islami Bank has already received Tk 450 crore as deposits and liquidity support," said Sadiqul Islam.

The bank is now honouring a small number of cheques, which will eventually help restore client confidence, said the new chairman, adding that the new board has recovered Tk 794 crore from borrowers.

The bank has also increased its focuson dealing with cases against defaulters, he said.

"We have tracked most of the borrowers who took loans in recent years. We are in touch with them. The bank will surely protect the money of the depositors," he said.

The new chairman said Social Islami Bank would be able to conduct all normal banking activities, such as opening letters of credit (LCs) and offer some other banking services, as the central bank was gradually withdrawing restrictions.

Mentioning the bank's liquidity crisis, he said as per rules, their banking business was supposed to close because of a shortfall in cash reserve ratio (CRR) and statutory liquidity ratio (SLR) with the central bank, but that did not happen.

"The central bank allowed us to run our business despite a negative current account balance, that is why we are in a severe liquidity crisis," he said.

The bank faced its first CRR shortfall in November 2022.

From January to June this year, Social Islami Bank collected more than $400 million as remittance at high exchange rates and then it was provided to some state-run banks at a low rate as per the verbal instruction of the central bank.

This led to the Shariah-based lender incurring a loss of Tk 130 crore, according to officials at the meeting. They said the issue is now under the inspection of the central bank.

Besides, the bank will conduct an audit from 2017 to August this year.

The bank's Managing Director (acting) Mohammad Forkanullah, directors and other top officials were present at the meeting.

The Daily Star could not reach S Alam Group owner Mohammed Saiful Alam on his phone for comment yesterday.