The Bangladesh Bank (BB - central bank) has significantly restricted banks in the country that are controlled by the S Alam Group from conducting letter of credit (L/C) business.

The L/C restrictions are part of a package introduced by the central bank due to concerns over financial irregularities at the group's banks and their inability to maintain required financial ratios.

Banks affected

The BB restrictions prevent the banks from issuing new loans, rescheduling existing ones, and crucially, from opening new import L/Cs.

The banks affected include Islami Bank Bangladesh, Social Islami Bank, First Security Islami Bank, Union Bank, Global Islami Bank, and Bangladesh Commerce Bank.

Banking sector stabilisation

These measures have been put in place as part of broader efforts to stabilise the banking sector and address concerns about the financial health and management practices of these institutions.

But because the ability of these banks to participate in L/C business has been severely curtailed, the measures will likely impact both large-scale trade financing and services for smaller businesses reliant on international trade​

Political connections

Saiful Alam Masud, the chairman of S Alam Group, has been connected to significant financial irregularities and is reportedly closely tied to recently deposed Prime Minister Sheikh Hasina.

Over the years, S Alam Group, under Masud's leadership, has been accused of leveraging these political connections to take control of several banks in Bangladesh, beginning around 2017.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.