Banks find no buyers for S Alam Group's auctioned properties to recover money

Highlights

• Banks fail to attract bidders for auctioned properties of S Alam Group
• Lenders move to file cases with Artha Rin Adalat to recover dues
• Janata Bank alone seeks to recover Tk10,700cr from six S Alam firms
• It struggles to recover over Tk1 lakh crore in unpaid loans
• Steel mill, power plant, edible oil factory among major assets up for sale
• Islami Bank forms a 14-member legal team to address financial irregularities involving S Alam Group

Banks across the country, struggling with massive defaulted loans of Chattogram-based conglomerate S Alam Group following the July uprising, are failing to find buyers for the group's auctioned properties.

As a result, lenders are being forced to file cases with the Artha Rin Adalat after unsuccessful auctions, a move that will likely prolong the already difficult process of recovering funds.

For instance, the Sadharan Bima Bhaban Corporate Branch of Janata Bank held six separate auctions in November and December last year against six S Alam Group companies to recover defaulted loans amounting to Tk10,700 crore. Despite allowing bidders a window of 15 to 30 days, the bank failed to attract any buyers, prompting it to move to court.

Speaking to The Business Standard, Badal Kanti Dash, the branch manager of Janata Bank, said they had no option but to file a case with the Artha Rin Adalat after failing to draw interest in the auctions.

"Sometimes, banks sell properties even below the loan value in cases of overvaluation. However, despite advertising in all major national and local newspapers, we did not receive any response," he said.

Similarly, the country's largest private commercial lender, Islami Bank Bangladesh, which is grappling with more than Tk1 lakh crore in unpaid loans from S Alam Group, also failed to secure bidders for its auctions.

The bank's Khatunganj branch has called seven auctions since March against seven companies of the group, but two of those auctions have already expired without attracting a single bid.

In a recent effort, Islami Bank's Chawkbazar branch advertised an auction on 28 April for land owned by Ideal Flour Mills, an S Alam Group company, located in Banshbaria, Sitakunda, Chattogram, in a bid to recover Tk1,100 crore in defaulted loans. Bidders must submit their offers by 8 May.

Ideal Flour Mills secured a Tk900 crore loan from Islami Bank's Chawkbazar branch between September and October 2022. Due to non-payment, the debt has now ballooned to Tk1,100 crore.

On 27 April, Islami Bank announced another major auction involving assets of S Alam Group, including a steel mill, a power plant, an edible oil factory, and approximately 38 bighas (1,149 decimals) of land, to recover loans worth Tk2,180 crore.

The auction notice, published in national and local newspapers, lists the mortgaged properties of S Alam Cold Rolled Steel Ltd, S Alam Power Generation, and S Alam Vegetable Oil – all subsidiaries of S Alam Group.

Earlier, on 22 April, the bank also called an auction for the mortgaged properties of S Alam Refined Sugar Industries, another major enterprise under the group. The company's managing director is Mohammad Saiful Alam (Masud), and its chairman is his brother, Mohammad Abdullah Hasan.

Bank officials, speaking on condition of anonymity, told TBS that auctions are being conducted primarily as a procedural step before filing cases with the Artha Rin Adalat. "We have not received any buyers for the first two auctions in March and April. Frankly, we do not expect bidders for the upcoming ones either as buyers are not willing to participate out of fear," said one official.

Nevertheless, banks must complete the auction process before initiating legal action against defaulters.

Since 5 August, Islami Bank has been gradually putting S Alam Group's mortgaged properties up for auction due to continuous non-payment. The group's owner is currently believed to be abroad.

S Alam Group, which holds around 83% of Islami Bank's shares, saw its holdings seized by order of Bangladesh Bank following the collapse of the Awami League government, with which it maintained close ties. The bank's board was subsequently dissolved, ending the group's control over the institution.

S Alam Group and its affiliates allegedly secured Tk1.05 lakh crore from Islami Bank through direct and indirect means, laundering a significant portion abroad. Of the total, Tk85,445 crore was taken directly, while Tk20,038 crore was routed indirectly.

Meanwhile, Islami Bank has formed a 14-member central legal team to address alleged financial irregularities involving major institutional shareholders, including S Alam Group and its affiliates.

Approved at a recent Audit Committee meeting, the team will provide legal support, draft complaints, review notices, and guide the bank in filing lawsuits against responsible parties for financial and reputational damages.

Islami Bank also plans to engage international investors such as the Islamic Development Bank (IDB), International Finance Corporation (IFC), World Bank, and Al-Rajhi Group to explore the potential sale of these frozen shares, subject to regulatory approval.

In total, eight commercial banks previously controlled directly or indirectly by S Alam Group are now saddled with significant defaulted loans, according to bank insiders. These banks are also preparing to auction mortgaged properties of the conglomerate in an attempt to recover their dues.