Dhaka, Bangladesh (BBN)– The Islami Bank (Bangladesh) Limited (IBBL) is the largest and most profitable bank, and by all accounts one of the best-performing companies, in Bangladesh, according to the prestigious Forbes magazine.
The United States-based business magazine has also found that the Islami Bank has tapped into what is called the country’s “Two Rs” approach: ready-made garments and remittances from workers abroad.
Helping with industrialisation in a labour-intensive sector has generated employment even as millions of migrant workers send wages back home–either way, new customers to be had, the global magazine added.
“Small firms that the bank embraced have remained clients as they grow and go into other sectors like steel and power. It notably pushes to help women entrepreneurs,” the Forbes said in its article titled ‘Islami Bank: Bangladesh’s Most-Watched Bankers,’ published recently.
Since the IBBL inception in 1983, it has grown threefold every five years. It has 10.7 million depositors, 27 per cent of Bangladeshi remittances and 23 per cent of the small and medium enterprises market.
Assets, at $9.3 billion, make it nearly the size of, say, AlliedBank in Pakistan or Asia Commercial Bank in Vietnam.
Despite its success, the bank has been dogged in recent years by suspicion that it has been used by, or even helped fund, Islamic terrorists, the news magazine observed. “No intent has been proven, but Islami Bank increasingly seems to be attending to image cleanup and domestic political sensitivities.”
“The regulatory authority has never come with such allegation that Islami Bank was ever engaged in terrorist financing,” says Mohammad Abdul Mannan, its managing director and chief executive. In an interview at the company’s head office, close to the Dhaka Stock Exchange on a wide street replete with nearly all the top banks in the country, he continues: “This bank is the most compliant bank in the country, according to the central bank. Yes, sometimes some [negative] perception may have [been there], but I feel it is no longer there.”
Without a doubt, funds from the Middle East have been at Islami Bank’s core: first the initial investors, later deposits by Bangladeshis, mostly construction and cleanup workers. Mr. Mannan, 64, largely built this business for the company. “If you ask me whether I know GCC [Arab Gulf] countries or not, I can tell you, I have visited every village in Saudi Arabia,” he says. “Each and every village. I did not see any Saudi citizen who can name villages and areas in his country like me.”
The bank dispatched Mr. Mannan there in 1995. At the time, “My chairman congratulated me as ambassador of Islami Bank in Saudi Arabia. I thought as ambassador I should have many suits. I [had some] made, and I took a very big suitcase with me,” he recalls with a chuckle.
But he got there to find his prospective clients were washing cars, cleaning streets and laying bricks. He packed his suits away. Instead, one night, with a shawarma in hand and a Pepsi to wash it down, he sat on a pavement on the outskirts of Riyadh and offered food and conversation to a handful of his countrymen. They were soon surrounded by a few score, he remembers. He took the address of each person and visited them later.
That was the start. Over the next five years he would spend evenings at the giant village sheds where Bangladeshi laborers repair to eat and sleep after a workday in different desert areas. At each he would find 2,000 to 3,000 potential account holders, preparing for the day when they would return home to small nest eggs. He’d be up all night conducting these meetings. (Even today he doesn’t sleep for more than two or three hours a night, he says.) Mr. Mannan says he wrote introductions to open accounts for 70,000 depositors.
Even as it grew, Islami Bank did not venture into businesses that are considered haraam (off-limits), like smoking. The bank finances the import of fertilizers, for instance, but will not finance what’s used to grow tobacco, a big crop in Bangladesh.
Dr. Atiur Rahman, Bangladesh’s respected central banker until earlier this year, said that in his seven-year tenure scrutiny of Islami Bank’s operations he never found a direct link to any terrorism-related activities. But he did see that changes were made to the bank’s board. “The government had a suspicion that if the board has only their people, or Islamic people, they might miss some untoward activity. The bank has come out of that shadow now.”
Dhaka’s rivalrous banking community respects the IBBL as a tightly run ship. While most of the 56 banks in the country are plagued by rising nonperforming loans, poor management and operational inefficiency–Islami Bank is one of the few that isn’t, says Fahmida Khatun, research director at the Center for Policy Dialogue (CPD), an NGO in the capital that researches the macro-economy, trade and development policies.