Rejoinder, our reply

Islamic Bank Bangladesh Limited has sent a rejoinder to a report published in The Daily Star on April 24 under the headline “Islami Bank 'Crisis': Two reasons led to Arastoo's exit”.

Signed by Nazrul Islam, assistant vice president of the bank's public relations division, the rejoinder says the reasons mentioned in the report were not correct. Arastoo Khan, former chairman of Islami Bank, resigned from his position following the banking rules and regulations. He resigned from his position on personal grounds like personal inconveniences and other engagements. This is what he stated in his letter of resignation. The report stated “A list was sent to the bank's chairman asking him to fire 21 officials”. This is not true. Besides, the statement regarding the two loan proposals of Tk1,900 crore was not true. No such loan proposals have been refused.

OUR REPLY

The Daily Star ran the report after talking to some directors and senior officials of Islami Bank to verify the existence of the list of 21 officials.

Tap Here to Add The Daily Star As A Trusted Source

The board led by Arastoo Khan had asked five out of the 21 to step down. The officials -- an additional managing director, three deputy managing directors and a senior executive vice-president -- handed in their resignations on April 3 and the board accepted the resignations two days later.

At least two of the officials were set to retire this year with full benefits.

The other factor that led to Arastoo's resignation was his tough stance on disbursement of large loans, which stemmed from the bank's high loan-deposit ratio.

As of March 31, Islami Bank's loan-deposit ratio was 92 percent, which was well above the regulatory ceiling of 89 percent.

If the bank issues fresh loans, especially large ones, the ratio will shoot up further, which may result in penalty from the Bangladesh Bank. The central bank has already sent a warning letter to the lender in November last year in this regard.

Keeping this in mind, Arastoo as the bank's chairman shot down all the proposals for large loans. He even admitted this to The Daily Star soon after his resignation on April 17.