Social Islami Bank PLC (SIBL), controlled by S Alam Group, concealed approximately Tk7,853 crore in defaulted loans in its 2023 annual report, according to a Bangladesh Bank investigation. The bank officially reported only Tk1,716 crore in non-performing loans (NPLs), while the actual figure stood at Tk9,569 crore.
Additionally, SIBL was required to maintain Tk9,281 crore in provisions but reported just Tk1,153 crore, thereby hiding Tk8,128 crore in provisions. This discrepancy was uncovered by a central bank team during inspections of five branches and a review of off-site reports from five randomly selected branches.
Despite these findings, Bangladesh Bank approved the significantly understated NPL figure of Tk1,716 crore, raising concerns about potential collusion between senior central bank officials and the bank’s management. Junior officials allegedly faced pressure to underreport the actual defaulted amounts.
In spite of the massive hidden NPLs, SIBL declared a 10% dividend for 2023, with 5% in cash and 5% in stock. The inspection also uncovered that the bank required a provision of Tk1,708 crore for investments affected by court orders but reported only Tk40.97 crore, leading to a provision deficit of Tk1,667 crore.
Further discrepancies were found in the offshore banking unit, where the required provision was Tk154 crore, but only Tk20 crore was reported.
S Alam Group took over SIBL in 2017, and since then, bank officials allege that most loans have been acquired by the group and its affiliates. Currently, the bank’s founding directors are protesting to regain ownership.
SIBL’s 2023 financial report showed total deposits of Tk35,739 crore and investments of Tk36,082 crore as of December 30, 2023.
