Salman F. Rahman’s Troubled Legacy in the Financial World

Salman F. Rahman’s Troubled Legacy in the Financial World

 "Salman F. Rahman, a trusted adviser to Sheikh Hasina with ministerial rank, is now a disgraced suspect in police custody."

He was arrested in connection with the killing of a shop employee, not for the financial misconduct he was notorious for. 

Salman thrived on financial transgressions, leaving his mark on the stock market and banking sector—both now struggling areas of the economy. Before his downfall, his last target was the country’s burgeoning Islamic finance sector, which he exploited to bolster his business empire. 

His reputation suffered greatly, with many familiar with his misdeeds labeling him as "the father of loan delinquencies" in Bangladesh. 

Salman was a lawmaker from Dohar and served as the vice-chairman of the Beximco Group. He also chaired IFIC Bank and held key positions in numerous business associations. 

Political analysts say he was one of the most influential figures among policymakers in the Awami League government.

Salman's Beximco Group posed a significant risk to Janata Bank by borrowing an amount nine times greater than the state-run lender’s paid-up capital—just one example of his controversial financial dealings.

Founded in 1972 by Salman F. Rahman and his elder brother as a commodity trading company, Beximco repeatedly had its loan defaults rescheduled by pressuring regulators to create or amend rules in its favor. The company also shielded itself from legal action by securing favorable court orders.

One notable instance of loan restructuring occurred in August 2014 when Salman rescheduled Beximco's loans from Sonali Bank, citing a liquidity crisis. The company attributed this crisis to politically motivated credit restrictions from 2001 to 2008, the repayment of Tk 800 crore in bank loans over the previous three years, and economic disruptions during the prolonged blockades and shutdowns in 2013-14.

With Tk 5,245 crore in loans from seven banks at the time, Beximco urgently called for debt restructuring in a letter to the central bank to ensure its survival.

On January 29, 2015, Bangladesh Bank issued a new large loan restructuring policy, accommodating applications from borrowers of Tk 500 crore and above. Eleven business groups took advantage of this policy, restructuring about Tk 15,000 crore in defaulted loans—Beximco alone accounted for a third of this amount, according to a report published at that time.

The policy offered borrowers lenient rescheduling terms, requiring only a 1-2 percent down payment instead of the usual 10 percent, with a maximum repayment tenure of 12 years. It allowed banks to withdraw the facility if any borrower failed to repay two consecutive installments, and the central bank stated that lenders could sue borrowers who defaulted on their loans. Despite these provisions, Beximco showed little concern for compliance.

Under the policy, state-owned Sonali Bank restructured Tk 1,070 crore of Beximco's loans for 12 years, extending the repayment period to 2027 at a 10 percent interest rate—significantly lower than the prevailing 13-14 percent rate. After a grace period starting in September 2016, Beximco was supposed to pay Tk 57.4 crore each quarter to Sonali Bank. By December 2017, six installments were due, but Beximco made only two payments, becoming a defaulter by the end of that year.

Despite this, Sonali Bank did not withdraw the rescheduling facility or sue Beximco. Instead, it rescheduled Beximco’s loans again in March 2018 without requiring any down payment, even though Bangladesh Bank’s rules mandated at least a 10 percent down payment for loan restructuring.

Another example of Beximco's manipulation occurred in August 2016, when Sonali Bank attempted to auction the property of Salman and his brother Sohail due to GMG Airlines' failure to repay loans. Beximco had acquired half the equity in GMG, the country's first private airline, in 2009. After Sonali Bank issued a notice in July to auction the mortgaged property, GMG secured a stay order from the High Court. The airline, grounded for years, managed to keep its accounts regular, thanks to the court's intervention.

Salman is also accused of ruining Bangladesh’s debenture market by delaying the repayment of around Tk 100 crore in funds raised in the 1990s. Debentures are unsecured debt instruments that rely on the issuer's creditworthiness. Beximco issued four debentures in 1994-95 with a 10-year tenure. Although these debentures matured in 2004 and 2005, Beximco did not repay the funds until 2021.

In 2021, as Beximco prepared to issue a Tk 3,000 crore sukuk, the debenture default issue drew criticism. The Bangladesh Securities and Exchange Commission ordered the company to repay the overdue funds, which it finally did—15 years late.

Salman’s Beximco also issued the country’s largest sukuk in 2021, raising Tk 3,000 crore. However, Salman, then an adviser to the Prime Minister on private industry and investment, used his political influence to drive the bond sales. Institutional investors showed little interest in subscribing to the bonds, forcing the Bangladesh Securities and Exchange Commission to extend the subscription period twice. Salman even pressured Bangladesh Bank to change its rules, allowing banks to invest in his sukuk.

To boost the stock market, the central bank created a fund, permitting banks to borrow Tk 200 crore for stock market investments. Salman then forced the central bank to issue a circular allowing banks to invest in sukuk. Subsequently, he pressured several banks to borrow from Bangladesh Bank and invest in his company’s sukuk, according to those familiar with the matter.