Cash-strapped Social Islami Bank wants Tk1.5cr conference in Cox's Bazar, cenbank says no 

Despite facing a severe liquidity crisis, Social Islami Bank Limited (SIBL) wanted to hold its business conference at a hotel in Cox's Bazar with a budget of nearly Tk1.5 crore.

However, the central bank, after evaluating the bank's financial situation, instructed that the conference be held in Dhaka at a lower cost instead.

Following the board's decision, the bank applied to the central bank on 8 December for approval to hold the event in the beach town. 

In its letter, SIBL announced plans to host the Annual Business Conference 2025 at Baywatch Hotel in Cox's Bazar on December 17-18, with 270 participants. 

The cost of the conference was set at Tk1.10 crore, excluding VAT and taxes.

An official from the central bank told The Business Standard that under the pretext of loans, SIBL had allowed large sums of money to be extracted by S Alam Group.

The bank has been maintaining a negative balance in its current account for a long period and has been struggling to return depositors' money, added the official. 

"Despite this, the bank decided to spend nearly Tk1.5 crore on the conference including taxes, which the central bank deemed inappropriate. As a result, approval for the event in Cox's Bazar was denied," he said.

In response, Nazmus Saadat, acting managing director of Social Islami Bank, told The Business Standard that they intended to host the conference in Cox's Bazar at a low cost. 

"Our plan was to inspire branch managers by holding this conference early in the year. However, the central bank has instructed us to cut costs, so we will reschedule the event in Dhaka," added Saadat.

In August last year, the Bangladesh Bank restructured the board of Social Islami Bank, severing its ties with S Alam Group. A new director was appointed from the group of shareholder-entrepreneurs, along with four independent directors. 

Following the restructuring, top officials known to have close connections with S Alam Group resigned.

Allegations suggest that after the bank came under S Alam Group's control in 2017, significant financial irregularities allowed funds to be siphoned off, leading to a liquidity crisis. 

For nearly two years, Bangladesh Bank supported the bank by printing money. However, after the fall of the Awami League government, this assistance ceased, pushing the bank into further liquidity issues and hindering its ability to repay depositors.

Although the central bank's intervention has helped ease some of the liquidity strain, Social Islami Bank faced severe liquidity shortages from August to October. 

By the second week of October, the situation had improved slightly, and the bank allowed customers to withdraw a maximum of Tk20,000 each.

Still in deficit

Social Islami Bank remains in deficit in its current account and provisioning despite receiving liquidity support from the central bank. 

As part of the conditions for borrowing funds under the central bank's guarantee programme, the bank was restricted to a 5% increase in operational expenses compared to the previous year. 

Currently, the bank has borrowed Tk1,175 crore from the central under special liquidity support, in addition to a loan of Tk4,000 crore secured through various instruments. 

However, the bank's current account with the central bank is in deficit by Tk3,398 crore, and its provisioning shortfall for non-performing loans stands at Tk1,500 crore. 

The ongoing current account deficit has led to penalties of nearly Tk300 crore.