Some officials of the Islamic bank, speaking on the condition of anonymity, said that S Alam Group has started the process of buying some companies of Enontex. For this reason the loan was distributed in a hurry. But according to the rules of Bangladesh Bank, there is no legal provision to repay the loan of one bank by borrowing from another bank.
Janata Bank managing director Abdul Jabbar told Prothom Alo in his office last Wednesday, “The loan of the Enontex group has been rescheduled. It was due till June, which has been extended till December. I heard that the group is paying Rs. They are trying to sell it. We have also given permission to two companies to sell them. To sell them, they will have to repay all our debts. I have not received any money yet.”
Liquidity crisis not averted, no punishment
Meanwhile, the Islamic bank is facing a liquidity crisis after several loans were disbursed anonymously from the bank. However, no officials involved in distributing such loans were punished, and some were promoted. As a result of the Islamic bank’s liquidity crisis, four other Shariah-based banks belonging to the Es Alam Group are also facing a liquidity crisis as these banks were dependent on Islamic banks for liquidity support.
Bangladesh’s Shariah-based banks remain in a liquidity crunch, according to a report by Moody’s Investors Service last Thursday. This situation has arisen due to a decline in customer deposits and failure to utilize most of the support measures provided by the central bank. The liquidity crisis may also impact the credit quality of banks. As a result, Islamic banks in the country may face difficulties in repaying short-term liabilities.
According to Moody’s, in 2022, 10 Islamic banks of the country were successful in maintaining liquidity as per regulation. But after 6 months it seemed that 4 out of 10 banks had lagged behind in this matter. Although six banks were able to maintain liquidity as per norms, their excess liquidity was low.
Another major rating agency, Fitch Ratings, said that Sharia-based banks suffer from greater liquidity problems than conventional banks due to lending irregularities.
According to Bangladesh Bank sources, Islami Bank had deposits of Tk 1.51 trillion 5.03 billion on November 24 last year, which declined to Tk 1.41 trillion 6 billion last December. Subsequently, last August the deposits increased to Tk 1.49 trillion 170 million but it again declined to Tk 1.47 trillion 7.92 billion. This amount is deposited by about 15 million customers. The bulk of the bank’s depositors are from rural areas but loans are being distributed in Dhaka and Chattogram.