Islami Bank Bangladesh Ltd (IBBL) is working to restore depositors' confidence by way of waging campaigns, said its managing director Mohammed Monirul Moula. 

"There is no scope to deny that some mistakes had taken place at the bank. And we have learnt the lessons so that those mistakes can be avoided in the coming days," he told The Daily Star in an exclusive interview last week.

"I think by this year, we will be able to bring back the public confidence that we enjoyed previously."

His plan comes as the largest private bank in Bangladesh celebrates its 40th anniversary.

Established in March 1983, IBBL was the first Shariah-based bank in Southeast Asia.

IBBL has recently come under scrutiny due to widespread financial scams.

Th bank allegedly disbursed Tk 7,246 crore in loans to nine companies last year violating banking norms. Of the amount, Tk 2,460 crore was disbursed in the first 17 days of November last year. Most of the nine companies were sister concerns, many of which provided false business addresses, of Rajshahi-based Nabil Group.

Moula, who was appointed as the managing director of IBBL in January 2021, talked about the scams that rattled the entire financial sector.

He said the bank did not follow due diligence in some cases and made some investments in a hurried manner to meet the immediate demand for loans.

"We should have scrutinised the addresses of the businesses before disbursing the loans. Since we have a good relationship with Nabil Group, the bank did not give importance to scrutinising the accuracy of the business address of its sister concerns."

Moula, however, said the bank financed Nabil Group based on its long-standing relationship.

"We financed the group with the utmost confidence. If the sister concerns can't repay the loans, the group will not be able to ignore the responsibility."

Banking norms, however, stipulate that a company is not obliged to clear the loans given to its sister companies.

IBBL has recovered around Tk 900 crore of the outstanding loans amounting to Tk 7,246 crore from the concerns of Nabil Group, and the rest will be paid back in phase in the coming days.

"The bank is now focusing on ensuring due diligence and good governance in its all operations, and such type of mistakes will not repeat," he said.

Moula, who started his career in the bank in 1986, also responded to questions regarding the takeover of IBBL by S Alam Group.

Several little-known local companies linked to S Alam Group had bought the bulk of the shares of IBBL before the change in ownership and the reshuffling at the board and management.

The companies started buying shares at Islami Bank in 2012 and secured a strong position by 2016.

Finally, the Chattogram-based business group took control of the bank in January 2017, a development that would not bode well for IBBL, analysts warned at that time.

Asked about the change, Moula said the change in the board has not affected the bank.

"Change does not give a negative message always. It brings positive things in many cases.

In addition, the financial indicators of the bank have improved since the transformation."

For instance, the amount of deposits at IBBL stood at Tk 56,000 crore in 2016. It increased to Tk 153,000 crore just before the latest spate of loan anomalies made headlines.

The bank's investment increased to Tk 137,000 crore in 2022 in contrast to Tk 48,000 crore six years ago.

He did not respond when asked whether there was any conflict of interest in the loan disbursed to S Alam Group since directors nominated by the conglomerate sit on the board of IBBL as well.

"We have financed S Alam group. But we did not give any money to the concerns of the group that have representative directors on the board."

"There is no policy violation. We also have not financed the businesses that have nominated directors to the board."

"We are not allowed to finance the companies whose owners are involved in the bank's board as per banking rules," said Moula, adding that there has been a long-lasting business relationship between IBBL and S Alam since 1985.

He said there is no dispute between IBBL and S Alam Group and the group's business has flourished on the back of the loans from the bank.

He was asked whether the allegation of anomalies in appointing officials in the bank since 2017 was accurate. "The board and management can hire officials without a written exam as per the recruitment policy of the bank."

"The bank can even appoint officials by conducting any viva. We have followed rules and regulations while appointing employees."

Banks in Bangladesh usually arrange written and viva examinations to recruit skilled employees. 

Moula said the banking sector was almost stable before the recent stress.

"But there was a rumour in November that no bank would survive, leading people to withdraw deposits from many banks."

Around Tk 15,000 crore was withdrawn from IBBL.

But Moula said: "Depositors are now coming back and parking their funds with the bank."

He added: "We are not in a position to disburse large loans due to the decrease in deposits. We will give out such loans when the deposit volume rises."

The bank is now giving out loans to the SME, agriculture, consumer, and retail sectors.

"We have a successful track record. So, we believe that we will be able to bring back the public confidence soon."

IBBL is still popular among expatriate Bangladeshis. It has deployed 28 employees in countries such as the US and the nations in the Middle East to attract migrant workers to send money home money through its channel.

The bank brings a sizeable volume of remittances to the country.