A CLASH between two groups of employees of Islami Bank on August 11 and reported tension in some other banks and financial institutions demand early attention of the authorities. At least six Islami Bank employees were injured as unnamed attackers fired into them. The clash erupted when the bankers appointed before 2017, when the S Alam Group with the backing of the Awami League government took over Islami Bank, tried to stop the bankers, loyal to the S Alam Group owner Saiful Alam, appointed after 2017 from entering the bank. The injured are from the first group. The bankers loyal to the group are reported to have brought in armed outsiders. Since the fall of the Awami League government on August 5, tension has mounted among the groups. Tension is also rife in some other banks and financial institutions where employees have demanded the resignation of top officials to stop irregularities and ensure good governance. The banking sector has faced massive irregularities and a sharp rise in defaulted loans over 15 years.

The Awami League government, moreover, allowed some people to take control of banks. The S Alam Group owned or controlled at least nine banks and non-bank financial institutions. The group also violated rules and embezzled a huge amount of money — the group reportedly lifted more than Tk 30,000 crore from Islami Bank when it was entitled to borrow a maximum of Tk 215 crore from the bank. When the banking sector as a whole was pushed to the verge, the government and the central bank were willing to save the people responsible for the sorry state of the sector than to hold them to justice. When the banking sector is plagued with a rising default rate, now standing at 20 per cent of total outstanding loans, the central bank offered irrational concessions to loan defaulters. The authorities also manipulated figures to show a reduced amount as defaulted loans. What also contributed to the situation was the previous government’s reluctance at attending to the issue and bringing the people responsible to justice. The Anti-Corruption Commission and some individuals filed a number of cases against a number of bankers, but none was brought to justice.

The takeover of banks and non-bank financial institutions by people close to the Awami League destabilised the banking sector to a great extent. The attempt now to take control of the institutions by groups of employees or others is also illegal and unacceptable. The interim government must, therefore, institute a commission to assess the situation and legally address it. The authorities must improve financial management, bring about changes in the fundamentals and prioritise transparency, accountability and sound management practices in the sector. The authorities must also hold the people responsible in the Islami Bank incident to justice.