First Security bank officials protest outside S Alam's Ctg residence over loan repayments

Officials of First Security Islami Bank (FSIB) staged a sit-in today (10 December) in front of the residence of Saiful Alam Masud, chairman of the S Alam Group, in Chattogram's Sugandha Residential Area, demanding repayment of huge loans disbursed to the business group.

Officials from 12 branches in the Chattogram region participated in the protest, which began around 11:45am.

They alleged that the group had obtained a significant amount of money as loans, resulting in severe challenges for the bank.

"We manage public deposits and invest the funds. Failure to recover investments has created a crisis," said Mustafa Kamal, senior vice president and manager of FSIB Khatunganj branch. 

According to Kamal, S Alam Group borrowed a total of Tk45,000 crore under various entities, with Tk35,000 crore sourced from branches in Chattogram.

"These loans are now turning into non-performing loans," he added. 

When questioned about the rationale behind granting such large-scale loans to a single group, Kamal responded, "The circumstances at the time of investment were different; we were unable to conduct proper scrutiny of the investments."

The sit-in was attended by over a hundred FSIB officials, including Mohammad Mustafa, manager of the bank's Khatunganj branch, Mosharraf Hossain, manager of the Agrabad branch and Mohammad Anwar ul Alam, manager of the Jubilee Road branch.

According to officials, the majority of the bank's investment, approximately Tk45,000 crore, was lent to the S Alam Group.

The total customer deposits at FSIB also amount to about Tk45,000 crore, while the bank's total investment (loan) stands at around Tk65,000 crore. The difference was covered through borrowing from the call money market.

As per regulations, Shariah-compliant banks can lend up to 92% of their total deposits, with the remaining 8% required to be deposited with the central bank (advance-to-deposit ratio).

However, instead of maintaining this reserve with the central bank, the bank has borrowed additional funds from the call money market to extend more loans. As a result, the bank's investments (loans) have surpassed its deposits.

First Security Islami Bank, previously controlled by the controversial S Alam Group, has faced a significant customer deposit crisis since the change of government on 5 August.

The Bangladesh Bank has reshuffled FSIB Board of Directors, removing S Alam's influence.

Despite the Bangladesh Bank's liquidity support, the bank continues to struggle in paying its customers. 

Contacted by TBS, S Alam Group Deputy Manager Ashish Kumar Nath said banks are not allowing the opening of LCs, hindering the import of raw materials for factories. This has made the group's business operations challenging, resulting in difficulties in repaying the loans.