How much is SIBL’s defaulted loan?

After five years of change in ownership and management, Bangladesh Bank has found major irregularities in the loans of the private sector Social Islami Bank (SIBL). The Central Bank says that many of the new loans given by SIBL have not been followed properly. Many customers have been given money without project only against documents. This money is not coming back now. For this, the bank’s loan of five and a half thousand crores is eligible to be defaulted again.

According to SIBL, the bank’s default rate is 5 percent. However, if calculated on the basis of Bangladesh Bank’s inspection report, the bank’s defaulted loan rate will be more than 23 percent.

SIBL started its journey in 1995. However, its directors were embroiled in internal conflict around 2010. At this time, becoming a director of the bank with false information, mismanagement in the management of the bank, and anonymous loans of the directors created a multi-faceted crisis. In this situation in 2012, the then Governor Atiur Rahman called the directors of the bank and resolved the issues. Then the bank started to turn around. But in October 2017, there was a big change in the ownership and management of the bank. A Chittagong-based industrial group took over the ownership and management of the bank. Since then, the financial condition of the bank has started to deteriorate again. Depositors’ money is at risk.

Bangladesh Bank Executive Director and Spokesperson Sirajul Islam said that a letter has been sent to SIBL on the basis of what was found in Bangladesh Bank’s inspection. At present, the amount of defaulted loans of the bank is 5500 crores more than the defaulted loans. It has been asked to collect or regularize these debts, otherwise it has been asked to keep a security deposit against it.

According to SIBL’s financial report, at the end of 2021, the bank’s deposits were Tk 34,166 crore and disbursed loans were Tk 31,277 crore. Out of this, the amount of defaulted loans is Tk 1,620 crores, which is 5.18 percent of the bank’s total loans.

But in 2021, Bangladesh Bank said that another 5,679 crores worth of SIbil debt is eligible for default. The amount of defaulted loans of the bank will be 7 thousand 299 crores, which is more than 23 percent of the total loans of the bank.

In a letter to the managing director of SIBL on April 25, the Central Bank said that out of the newly identified loans as defaulters, Tk 500 crore should be regularized by June, Tk 1000 crore by September and the remaining amount by December. Otherwise these loans have to be defaulted. In case of default, security deposit should be kept against this loan. The letter also said to submit the situation of these loans to the central bank every month.

Confirming the receipt of the Central Bank’s letter, SIBL Managing Director Zafar Alam said, “Efforts are on to recover the loans.” Some have already been collected. The Central Bank is being informed regularly as per the instructions.
According to the financial report, SIBL’s deposits in 2017 were Tk 22,879 crore, which increased to Tk 34,166 crore at the end of last year. At the same time, the debt increased from Tk 21 thousand 4 crore to Tk 31 thousand 277 crore. However, defaulted loans have decreased from 8.20 percent to 5.18 percent.