Bangladesh Bank (BB) has decided to dissolve the board of directors of the Islami Bank Bangladesh PLC, and reconstitute it within a couple of days.
"The board will be dissolved and independent directors will be appointed within two days," Governor Dr Ahsan H. Mansur told a press briefing at the BB headquarters on Tuesday.
He explained the central bank's measures in response to protests demanding reconstituting of the board of the country's largest unconventional bank, largely controlled by the controversial S. Alam Group.
"All shares of S Alam Group in the bank will now come under the government's control," Dr Mansur said, adding that the group will get back its shares upon repayment of the bank loans.
If the loans are not repaid, the group's liabilities will be adjusted by selling the government-held shares, he elaborated.
The central bank's intervention into the publicly listed bank comes on the heels of alleged unauthorised borrowing of a substantial amount of funds by the major shareholder group - a close accomplice of the immediate past government that was toppled amid mass upsurge.
Mr Mansur, who replaced Abdur Rouf Talukder, said that those who are yet to repay the bank loans will not be spared and the central bank will apply all possible legal means to recover the loans.
He went on to say that the boards of all the weak banks will be dissolved before their reconstitution. As part of the plan, the BB dissolved the board of the National Bank on Tuesday.
The BB has decided to take similar measures with the Islami Bank and other ones controlled by the controversial business conglomerate.
Responding to a question, the governor said the government will not take the responsibility of any bank, the board of which will be dissolved. Independent directors will run these banks but former directors holding 2.0 per cent stake will be taken on the board.
The independent directors are being brought in as the former directors do not hold 2 per cent or more shares at present, he added.
About the aggregate volume of the loans taken by the S. Alam Group and its associates from the banking system, the BB governor said it is yet to be ascertained how many loans were taken by names or unnamed. "It will take time and will be disclosed," he added.
Protestors demanded a restructuring of the board and removal of the top management of Islami Bank, which was taken over in 2017 by S Alam Group Chairman Mohammed Saiful Alam, his family members and the group's associated entities during the previous Awami League-led government's regime.
Earlier on Tuesday, Bangladesh Securities and Exchange Commission (BSEC), the securities regulator, slapped restrictions on purchase, sale, and transfer of shares by the entities of S Alam Group, its owners and family members of six banks.
Five of the banks involved are listed on the stock exchanges. These are: Islami Bank, First Security Islami Bank, Social Islami Bank, Global Islami Bank, Union Bank, and Bangladesh Commerce Bank.
Only Bangladesh Commerce Bank is not listed.
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