Sponsors of Social Islami Bank PLC (SIBL) have urged regulators to allow time for a structured recovery instead of pursuing a forced merger, arguing that the crisis-hit lender can return to profitability through fresh domestic and foreign investment, recovery of non-performing loans, and restoration of depositor confidence.
They opposed any move to merge SIBL with weaker banks, alleging the once-profitable Shariah-based lender had been “systematically destroyed” over the past seven to eight years.
The current crisis, they said, is not a normal financial failure but the outcome of a series of decisions following a change in control in 2017.
The demands were outlined at a press conference at the National Press Club in Dhaka on Monday.
Md Mahmudul Hasan, legal counsel to former chairman Rezaul Haque, said the bank’s current level of non-performing loans and borrowings from the central bank had not emerged overnight.
“Despite having full knowledge of irregularities and corruption, Bangladesh Bank failed to take effective action,” he said. “Instead, it remained silent, and so far, there has been no visible accountability for those involved.”
In a written statement, the sponsors said that on October 30, 2017, S Alam Group took control of the bank with the support of a state intelligence agency during the tenure of the then government.
Prior to that, SIBL had been one of the strongest Shariah-based banks in the country, regularly distributing dividends ranging from 11 per cent to 20 per cent between 2007 and 2016.
They alleged that irregularities in lending and asset management began after the change in control, gradually weakening the bank’s financial position.
The sponsors further claimed that even after the political transition on August 5, 2024, the bank was not returned to its original sponsors.
Instead, Bangladesh Bank formed a new board comprising four independent directors and one sponsor-director, most of whom lacked prior experience in bank management, a move they said made recovery more difficult.
According to them, the board failed to safeguard the bank’s interests over the past one and a half years and operated largely under the direction of the central bank.
They also alleged that on November 5, 2025, the central bank effectively reduced the bank’s share value to zero, causing significant losses to thousands of investors. At the same time, the burden of irregularities committed during the tenure of S Alam Group was shifted onto general shareholders, they said.
Hasan said the bank would need at least eight years to recover, noting that “such a large liability cannot be settled in a day.”
The press conference also highlighted the impact on depositors and businesses. Due to a loss of confidence, large volumes of deposits were withdrawn, worsening the bank’s liquidity crisis.
Many depositors have yet to recover their funds, while businesses dependent on the bank have been forced to scale down or shut operations due to a lack of support. The situation, they said, risks spilling beyond a single institution into broader financial stability concerns.
The sponsors said they had filed a writ petition with the High Court challenging the decision to merge SIBL. They also called for the Bank Resolution Act 2025 not to be passed until the matter is resolved.
They claimed that on October 7, 2025, the court issued a rule asking the central bank to explain its actions, but the merger process continued despite this.
At the press conference, the sponsors warned that merging SIBL with weaker banks would be “severely damaging” for depositors and investors. Instead, they proposed restoring management to the original sponsors and forming a new board that includes credible domestic and foreign investors.
They added that several large industrial groups, including IDB, have already expressed interest in investing in the bank. With adequate time and policy support, they said, SIBL can recover and return to profitability.
With investor interest emerging and legal challenges underway, the future of SIBL now hinges on whether regulators opt for restructuring or proceed with forced consolidation.
Former director Zabedul Alam Chowdhury and former independent director Abdur Rahman were also present at the press conference.
