Sponsors of Social Islami Bank PLC (SIBL) have urged regulators to allow time for a structured recovery rather than pushing for a forced merger. They argued that the crisis-hit lender can return to profitability through fresh domestic and foreign investment, non-performing loan recovery, and the restoration of depositor confidence.
Opposing any move to merge SIBL with weaker banks, the sponsors alleged that the once-profitable Shariah-based lender had been “systematically destroyed” over the past seven to eight years. They contended that the current crisis was not a typical financial failure, but the result of decisions made following a change in control in 2017.
These points were raised during 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 did not emerge overnight. “Despite being fully aware of the irregularities and corruption, Bangladesh Bank failed to take effective action,” he said. “Instead, it remained silent, and no visible accountability has been held for those involved.”
In a written statement, the sponsors highlighted that S Alam Group took control of the bank on October 30, 2017, with support from a state intelligence agency during the previous government. Prior to this, SIBL was one of the country’s strongest Shariah-based banks, regularly distributing dividends ranging from 11 to 20 percent 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 with four independent directors and one sponsor-director, most of whom lacked prior experience in bank management, making recovery more difficult.
According to the sponsors, the board failed to protect 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. Simultaneously, the burden of irregularities committed during the S Alam Group tenure was shifted onto general shareholders.
Hasan stated that 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, and businesses dependent on the bank have been forced to scale down or shut operations due to a lack of support. The sponsors warned that the situation could spill over into broader financial stability concerns.
The sponsors confirmed that 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 also noted that several large industrial groups, including IDB, have already expressed interest in investing in the bank. With adequate time and policy support, they believe SIBL can recover and return to profitability.
As investor interest grows and legal challenges continue, 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.
