Social Islami Bank Ltd (SIBL) is fighting to stay alive as Bangladesh Bank is pushing to merge it with four other troubled Islamic lenders. Sponsors of the bank want control of the board and fresh liquidity support instead of being folded into a larger entity.
The lender, once attractive for its pay packages, now suffers from a capital shortfall of Tk2,000 crore and provisioning gaps of Tk10,570 crore. It has already borrowed nearly Tk7,000 crore from the central bank to keep operations running.
At a meeting on September 4, SIBL’s board presented an eight-point recovery plan. Proposals include selling shares to local business groups and foreign investors, boosting deposits and remittances, activating dormant collection accounts, closing loss-making branches, cutting costs, and stepping up loan recovery.
The board was formed with only one sponsor-director and four independents, though many qualified sponsors were willing to serve, according to SIBL directors at the meeting.
They said that even with central bank funding, the current structure has failed to deliver a turnaround.
SIBL Chairman M Sadequl Islam said the bank has detailed “what we have done, what we plan to do, and what support we need.”
“It will be very difficult for SIBL to recover without central bank and government cooperation,” he added.
Sponsor-director Rezaul Haque told TIMES of Bangladesh that the regulator had not committed to the proposals.
A senior SIBL official called the plan “emotional”, arguing that a merger would be more realistic.
Bangladesh Bank spokesperson Arief Hossain Khan said the regulator remains firm on merging the five banks.
“We cannot make decisions based on hypothetical claims,” he said. “If they insist, they can recover on their own, they must prove it with evidence.”
SIBL’s troubles are tied to S Alam Group, which borrowed over Tk14,000 crore with only a quarter of the required collateral. The entire exposure is now non-performing. An asset quality review showed that as of September 2024, the bank’s non-performing loans accounted for 62 percent of SIBL’s portfolio — Tk23,575 crore of Tk37,842 crore.
The bank’s shares, which traded at Tk13.20 on September 29, have dropped to Tk5.40 from Tk7.10 a year earlier.
Founded in 1995 as Social Investment Bank Ltd, SIBL was rebranded before its 2017 takeover by S Alam Group. Its loan book has since nearly doubled to Tk38,000 crore, worsening liquidity strains.
