FSIB to bounce back soon

Highlights:

• After board restructuring, daily deposit net outflow-inflows reach a near-equilibrium position.
• Around 9 lakhs new customers joined FSIBin the last 8 months.
• Around Tk3700 crore fresh deposits have been added in FSIB's deposit baskets. 
• The bank plans to invest in SMEs in the same areas where deposits are collected
• 3000 officials have received special training under the new board
• New partnerships signed in Saudi Arabia, the UK, and the US to boost remittance inflow

When we took charge of First Security Islami Bank PLC (FSIB) in September 2024, our first priority was to assess the quality of the bank's human resources, followed closely by a deep dive into its financial health. We had to trace where the money had gone, how it had been misused, and who was responsible.

In the early days, we faced immense pressure from a wave of panic-driven deposit withdrawals. The bank was losing nearly Tk200 crore every day. That situation has now improved significantly, with a positive turnaround in deposit inflows.

We've been engaging directly with people, rebuilding relationships and restoring confidence in the bank. As a result, even during this challenging period, we've successfully onboarded nine lakh new customers, bringing in fresh deposits exceeding Tk3,700 crore. These numbers reflect a renewed and growing trust in FSIB.

What took place at FSIB before our intervention can only be described as one of the most serious financial scandals in recent banking history. It was nothing short of a massive financial heist—something rarely seen even on a global scale.

Shockingly, around 99% of the bank's deposits were concentrated in the hands of a few individuals based in Dhaka and Chattogram, while only 1% of investments were distributed across the rest of the country.

The situation was even worse in Chattogram, where over 80% of the bank's investments were controlled from a single building—S Alam Bhaban in Asadgonj.

Infographics: TBS

The savings of an entire nation funnelled into the pockets of one group. This kind of feudal financial control is simply unacceptable.

We've broken that model. Now our strategy is simple: wherever deposits are collected, that same area will be benefited from those deposits.This approach helps revive local economies, employment generation, and reduce poverty particularly in rural areas. 

The present board is working tirelessly to reshape the bank to serve the national interest to ensure inclusive growth and development. We are here to protect depositors. After taking charge, we evaluated all 5,000 employees of the bank—their skills, weaknesses, and potential. We've already trained around 3000 staff, not just branch managers but also lower-level employees. Regular meetings, trainings and workshops are now happening at the branch and zonal level.

Reckless hiring practices that undermined the bank

We discovered that the proper recruitment process had been completely disregarded at this bank. Shockingly, thousands of CVs were piled up in warehouses, with applicants often unaware of which bank they had applied to. These CVs were randomly selected and sent to various banks under one individual's control. We have now put an end to such irregular practices. Instead, we are focusing on retraining and upskilling employees who show potential to build a more competent and professional workforce.

FSIB's dangerous reliance on corporate deposits

Earlier, over 40% of FSIB's deposits came from corporate sources, offering unsustainably high profit rates. That's not banking; that's gambling without thinking profitability of the bank. Deposits were collected to satisfy a single person. 

A healthy bank should be business-oriented, not deposit-dependent. That's whywe're shifting focus to individual savings, ensuring long-term stability, and diversifying of investments to small borrowers.

Out of the bank's total investments of Tk63,000 crore, around Tk40,000 crore—either directly or indirectly—went to the S Alam Group. Some of these investments were falsely marked as "standard" when in reality they were not.

There were also instances of reciprocal lending between directors of different banks. For example, Bank X would lend Tk3,000 crore to a director of Bank Y, and in return, Bank Y would extend a similar loan to a director of Bank X. Both banks would then waive the interest (or profit) on these loans, allowing the directors to benefit personally while effectively looting national wealth.

Since the interim government took over, this cycle has been disrupted. The banking sector is now gradually moving towards greater transparency and accountability. Our focus remains firmly on protecting the interests of depositors and restoring public trust.

Strengthening remittance flow through global partnerships

Remittance is one of a strongest pillar of our national economy. After taking charge of FSIB, we gave special attention to increase remittance inflow in our bank. Having a wide range of remittance marketing experiences in the Middle East, the UK, and the USA, I understand remittance banking deeply. I am trying to utilise my experiences here. 

In FSIB, we've recently signed new remittance agency agreements in Saudi Arabia, the UK, and the USA. I believe that FSIB will be a leader in remittance banking in future.

No more bailouts

Earlier, we've taken some bailout assistance from the Bangladesh Bank and other banks to mitigate the liquidity pressure. But now we are in a position to manage the liquidity situation ourselvesby way of engaging fresh deposits throughout the country. 

Now, with our strategy of small deposits, localised SME investments, entrepreneurship development, staff training, and improved governance, we believe FSIB will fully be back tonormal banking operations soon.

Hard actions in recovering bad loans

We have taken hard measures in recovering bad loans. Alongside legal actions, we are taking different steps to recover defaulted investments, like putting social pressures on willful defaulters, hanging banners, festoons at defaulters' establishments, and filing suits against them.

I want to be clear—the loan defaults, the capital shortfall—this is all the legacy of the previous board. We will need time to recover from those damages. But we will.

A proven model for equitable investment

Islamic Shariah encourages the fair distribution of wealth, rather than its concentration in the hands of a few. Guided by the principles of Maqasid al-Shariah—the objectives of Shariah—we have adopted strategies to diversify our investments, especially in rural areas. 

Our focus is on creating employment, empowering women, supporting SMEs, and providing expanded working capital to local businesses. Through these efforts, we aim to help meet the basic needs of the broader population and contribute to a more inclusive economy.

This interview was conducted by Sakhawat Prince, Staff Correspondent, The Business Standard