BM Desk: Islami Bank, a publicly listed institution, has made investments in three financially weak banks under the control of the S. Alam Group — raising concerns from auditors about the recoverability of those funds.

This information was revealed in the audit report of Islami Bank’s recently published financial statements for the year 2024.

According to the auditors, Islami Bank invested a total of Tk 844 crore in subordinated bonds of First Security Islami Bank, Social Islami Bank, and Union Bank — all of which are considered financially vulnerable.

These banks are currently undergoing a merger process as part of reforms in the banking sector. Due to this, auditors have expressed doubts over whether Islami Bank will be able to recover its investments from these institutions.

Additionally, according to a circular from the Bangladesh Bank, a bank is allowed to lend a maximum of 25% of its capital to a single company or group. However, Islami Bank has reportedly extended credit exceeding this limit to multiple groups or institutions.

Under the Bank Company Act and Basel III regulations, Islami Bank is required to maintain a Capital to Risk-weighted Assets Ratio (CRAR) of 12.50%. Despite having a shortfall in provisions, the bank’s CRAR stood at only 7.57%, the audit report noted.

It is worth mentioning that Islami Bank, which was listed on the stock market in 1985, currently has a paid-up capital of Tk 1,609.99 crore. Of this, 99.81% is owned by various categories of investors on the stock market (excluding sponsors/directors). As of Monday (September 15), the company’s share price stood at Tk 42.90.