Sammilito Islami Bank files 10,000 suits to recover defaulted loans

The state-owned Shariah-based Sammilito Islami Bank has filed nearly 10,000 lawsuits to recover defaulted loans as part of a sweeping drive to address alleged corruption, loan fraud and misuse of assets under its previous ownership and management.

A forensic audit aimed at identifying those responsible for the alleged irregularities is also nearing completion, officials said.

The progress was presented at a high-level review meeting between the Bangladesh Bank governor and officials of the central bank’s Bank Resolution Department (BRD) on Thursday (August 27).

The meeting reviewed the bank’s restructuring efforts over the past six months, including the reconstitution of its board and management, restructuring of its workforce, branch rationalisation and integration of its technology systems.

Bangladesh Bank officials said the restructuring of the country’s largest state-owned Islamic bank is progressing under close supervision of the central bank, with depositors’ and customers’ interests being given top priority.

To allow customers to withdraw their deposits from any branch, Bangladesh Bank is nearing completion of a common interface integrating the operations of the five banks that were merged to form the new institution.

The integration of the bank’s core banking system (CBS), SWIFT, RMA and other IT infrastructure is also progressing rapidly, officials said.

The bank is pursuing alternatives to lengthy court proceedings to recover defaulted loans. Alongside legal action, it is working to introduce settlement-based mechanisms, including an exit policy and alternative dispute resolution (ADR).

Over the past six months, the bank’s board has been reconstituted with independent directors given greater representation. A new managing director and chief executive officer was appointed on July 16.

The organisational restructuring of around 16,000 employees has also been finalised to improve operational efficiency and reduce costs. Meanwhile, the rationalisation and merger of 780 branches and 1,500 business units are under way.

The mega bank began operations with Tk 35,000 crore in capital following the merger of five banks.

Bangladesh Bank has pledged continued monitoring and follow-up to ensure transparency, accountability and good governance, while recovering idle or stuck funds and channeling them back into productive sectors of the economy.