The banking and financial sector of any country serves as the backbone of its economy, steering the flow of money throughout. Unfortunately, over the past 15 years, this crucial sector in Bangladesh has been mired in rampant irregularities and corruption. From the Basic Bank to the Hallmark scandal, from the plundering by the S. Alam Group to the reckless borrowing spree of Salman F. Rahman—each of these incidents has created deep crises for the country’s economy. Over 12.5% of the total loans disbursed by Bangladesh’s banking sector have become non-performing, amounting to over Tk 2.11 trillion (Tk 211,000 crore). Behind these non-performing loans lies a dark chapter of political abuse and lack of government oversight over more than half a decade, which influential political figures and leading business groups and their families have taken advantage of. In today’s discussion, we will explore how the hard-earned money of ordinary citizens was silently looted from the banks and who the key players behind this looting were.
Overview
According to the Bangladesh Bureau of Statistics, Bangladesh’s GDP for the fiscal year 2023-24 stood at USD 459 billion (around Tk 55 lakh crore), making it the 35th largest economy in the world. Despite this, the country has 52 local banks. In contrast, India, a country 22 times larger in size and nearly 9 times bigger in economic scale, has only 34 local banks. According to The Daily Star, other neighboring countries have fewer banks: Pakistan has 29, Nepal has 20, and Sri Lanka has 16 local banks. Even two economies comparable to Bangladesh—Vietnam and Malaysia—have only 34 and 30 banks, respectively. This means that in comparison to the size of its economy, Bangladesh has significantly more banks than its neighboring and peer countries. Back in 2010, Bangladesh had 38 local banks, so why were 14 more banks approved later? The reasons behind this are now quite evident.

As of June 2024, the total deposits in Bangladesh’s banking sector amounted to Tk 17.42 trillion, while the total loans stood at Tk 16.83 trillion. In June 2024, non-performing loans (NPLs) reached a record high of Tk 2.11 trillion, accounting for 12.56% of the total loans. Just in March 2024, NPLs stood at Tk 1.82 trillion, and in just three months, NPLs surged by 16%, or Tk 29,960 crore, crossing the Tk 2 trillion mark for the first time. Both government and private banks saw a significant rise in NPLs. In March 2024, the NPLs of state-owned banks amounted to Tk 84,221 crore, which rose to Tk 1.2 trillion by June 2024. These NPLs accounted for about 33% of total loans given by state-owned banks. Private sector banks also saw a considerable increase in NPLs—from Tk 88,900 crore in March to Tk 99,900 crore in June 2024, representing around 8% of the total loans in the private sector. When the Awami League came to power in 2009, the total NPLs in the banking sector were around Tk 22,481 crore.
The primary reason for the massive increase in NPLs is political influence and corruption within the banking sector. Many borrowers, leveraging political clout, took out loans without providing any collateral and have not repaid them on time. However, the actual amount of NPLs may be even higher, as borrowers were allowed to reschedule their loans for extended periods, which politically influential individuals and businessmen took advantage of multiple times to reschedule their defaulted loans. Additionally, the Bangladesh Bank had set a rule that the overdue period for counting defaulted loans would be nine months, which was later reduced to six months in line with IMF conditions. Both of these measures were taken primarily to benefit MPs, ministers, and Awami League-supported businessmen. Moreover, under the protection of Bangladesh Bank’s high-ranking officials and former Governor Abdur Rouf, several banks concealed the true amount of NPLs. This was done mainly to avoid triggering any red flags in the economy so that Bangladesh could secure a USD 4.5 billion loan from the IMF. According to experts, the actual amount of NPLs could be twice as much as reported, casting serious doubts on the future of Bangladesh’s banking sector. With the rapid increase in NPLs compared to total deposits, ordinary citizens are growing increasingly concerned.
How the Banking Sector Was Looted in Bangladesh
The history of loan irregularities and corruption in Bangladesh’s banking sector is nothing new, but these issues took on a new dimension after 2009. Major institutions such as Basic Bank, Hallmark Group, Islami Bank, and S. Alam Group were involved in widespread plundering, shaking the foundation of the country’s banking system.

When the Awami League government came to power, two significant events shook the banking sector: the Basic Bank and Hallmark scandals. In 2009, the government appointed former Jatiya Party MP Abdul Hai Bachchu as the Chairman of Basic Bank. Between 2009 and 2013, under Bachchu’s leadership, massive loan irregularities occurred, particularly at the bank’s Gulshan, Dilkusha, and Shantinagar branches. Reports from Bangladesh Bank revealed that fraudulent loans worth approximately Tk 4,500 crore were embezzled during his tenure. Loans were approved without proper verification of documents, without collateral, and even through forged documents. Corrupt bank officials were found to be involved. The Anti-Corruption Commission (ACC) later investigated irregularities worth Tk 3,500 crore and filed 59 cases, with clear evidence that Tk 2,265 crore had been laundered. However, despite these investigations, key individuals, including Abdul Hai Bachchu, were not initially named as accused, causing frustration in the legal process. These cases are still awaiting trial.
Around the same time, the Hallmark Group scandal shook the nation. The group embezzled approximately Tk 4,000 crore from the state-owned Sonali Bank, representing nearly half of the bank’s Tk 10,000 crore non-performing loans at that time. The ACC’s investigation revealed that the group rented a house near Hotel Sheraton (now Intercontinental), where they orchestrated the entire fraudulent scheme. Using fake documents, they siphoned off money into five shell companies. Hallmark’s employees formed these companies, and through over-invoicing, they laundered the money into the group’s accounts. Despite Sonali Bank being the victim, Janata Bank also suffered losses, as Hallmark’s shell companies manipulated the system to draw money under false pretenses. Only Tk 567 crore was recovered before the owners were arrested in 2012, and no further recovery has been made since. The ACC filed 40 separate cases, including 11 cases for embezzling Tk 1,568 crore in 2012 and another 27 cases for misappropriating Tk 372 crore in 2013.
The situation worsened with the politicization of loans. Certain individuals took over banks solely for financial gain. A prime example is the takeover of Islami Bank by the politically influential conglomerate, S. Alam Group. Once a leading private bank in Bangladesh, Islami Bank became a vehicle for financial exploitation. According to The Daily Star, S. Alam Group alone borrowed Tk 95,000 crore from six banks, which accounts for 5.78% of the total banking loans in the country, 1.82% of the total GDP, and 5.45% of the total bank deposits. Of this, Tk 75,000 crore was borrowed from Islami Bank alone. In 2017, following the forced resignation of Islami Bank’s top three executives, the bank fell under the control of S. Alam Group. After this, the group treated the bank’s funds as their personal wallet, with large loans flowing through fake companies and fraudulent schemes.

S. Alam Group also exploited other banks. Janata Bank lent Tk 13,400 crore to S. Alam’s subsidiaries and affiliates, including Tk 10,450 crore through its General Insurance branch in Chittagong. The group also accessed loans through Social Islami Bank, where the chairman is the son-in-law of S. Alam’s owner, securing Tk 4,200 crore easily. Moreover, S. Alam’s family members and relatives hold key positions in Union Bank, Global Islami Bank, and First Security Islami Bank, from which the group borrowed Tk 2,000 crore, Tk 574 crore, and Tk 257 crore, respectively.
A similar scenario unfolded with Salman F. Rahman, the former Adviser for Industries and Investment to the Prime Minister. Using his political influence, Rahman borrowed Tk 36,000 crore from seven state-owned and private banks. Of this, one state-owned bank gave 25.51% of its loans, amounting to Tk 9,800 crore, to 30 Beximco-owned entities. As a result, the bank’s operations suffered heavily. Beximco’s companies also violated single-borrower exposure limits, which further strained the banking system. Moreover, the National Bank lent him Tk 2,952 crore, while AB Bank lent him Tk 605 crore. Reports from Bangladesh Bank revealed that his businesses owed Tk 11,000 crore to IFIC Bank, though the bank’s internal report only showed Tk 6,031 crore. In most cases, the central bank’s rules were violated, and most loans lacked sufficient collateral. Rahman repeatedly rescheduled his loans without repayment, and despite the awareness of these violations, Bangladesh Bank remained silent due to his close ties with the Prime Minister.
These high-level abuses have driven Bangladesh’s banking sector to the brink of collapse. However, following the fall of the government on August 5, there is renewed hope among the public. The newly appointed Governor of the Central Bank has promised to reform the banking sector and eliminate political interference. Despite recent political and economic turmoil, around Tk 70,000 crore was withdrawn from banks, but in the last month, Tk 30,000 crore has been redeposited—a sign of public optimism. Now, all eyes are on the Central Bank to see what steps they take to stabilize the banking sector.
Leave a Comment