A review of Islami Bank Bangladesh PLC’s Rural Development Scheme (RDS) annual reports and lending data raises substantial questions about claims made by Home Minister Salahuddin Ahmed in parliament that the programme was used to finance electioneering activities on behalf of a political party.

Speaking in parliament on June 9, Salahuddin alleged that RDS had been used as a vehicle for political mobilisation of Jamaat-e-Islami and claimed that 22,000 crore taka had been distributed through the scheme, including 11,000 crore taka before and another 11,000 crore taka after August 5, 2024.

He further alleged that women received 10,000 taka each before elections and suggested that the programme functioned as a mechanism for electoral influence.

The difficulty with those claims is not merely the absence of supporting evidence. It is that the financial data available in Islami Bank’s own annual reports point to a fundamentally different interpretation of how the programme operates and what its lending figures actually mean.

As Toronto-based financial analyst Taukir Aziz pointed out, there was probably a confusion between three distinct banking concepts: outstanding investment, annual disbursement and cumulative disbursement.

Outstanding investment is the stock of loans currently on the books and yet to be repaid. Annual disbursement is the flow of new loans issued during a particular year. Cumulative disbursement is the sum of all lending made since the programme’s inception.

Treating these figures as interchangeable produces misleading conclusions. A cumulative disbursement figure accumulated over decades does not represent money simultaneously circulating in the economy at a particular moment. It is a historical total.

Confusing cumulative lending with current lending is akin to mistaking a vehicle’s odometer for its speedometer, as Taukir said adding that one measures everything that has happened over time; the other measures what is happening now.

That distinction matters because RDS is not a conventional corporate lending programme. It is a microfinance operation built around small loans and weekly repayments.

Funds lent to one borrower are rapidly repaid and reissued to another. The same capital can therefore be counted multiple times in annual disbursement statistics while remaining part of a relatively stable outstanding portfolio.

This explains what might otherwise appear to be a contradiction in the figures. RDS currently maintains an outstanding investment portfolio of roughly 7,000 crore taka, a level broadly unchanged from a year earlier.

Yet annual disbursement during the same period approached 8,000 crore taka. The apparent discrepancy reflects the mechanics of microfinance rather than any extraordinary lending surge. Loans are repaid, recycled and lent again. The portfolio turns over at high velocity.

A simple analogy, pointed out by Taukir on his facebook post, illustrates the point. A restaurant with 40 seats may serve 400 customers a day. The fact that 400 people were served does not mean 400 seats existed simultaneously.

The same seats were used repeatedly. Microfinance portfolios operate according to a similar logic. Annual lending flows can be many times larger than the stock of loans outstanding at any given moment.

The Home Minister’s assertion that 11,000 crore taka was disbursed through RDS therefore warrants close scrutiny. Available annual reports show that RDS investment reached approximately 8,000 crore taka in 2024-25, the highest annual disbursement in the programme’s history.

That is a significant figure. It is not, however, 11,000 crore taka.

A political narrative meets arithmetic

More importantly, the increase itself appears unremarkable when placed in historical context. Compared with 2022-23, annual investment rose by roughly 500 crore taka. Compared with 2023-24, it increased by approximately 1,200 crore taka.

RDS has reportedly been disbursing around 600 crore taka to 700 crore taka per month for years while maintaining annual growth rates of approximately 13 to 14 percent.

Against that backdrop, the increase recorded in 2024-25 falls comfortably within the programme’s established trajectory.

No publicly available evidence has yet been produced demonstrating that the additional lending represented a politically motivated departure from historical trends. On the contrary, the available figures suggest continuity rather than anomaly.

The claim that women received 10,000 taka before elections is similarly less revealing than it initially appears. Since its inception in 1995, RDS has been structured primarily around lending to rural women.

More than 90 percent of its clients are female. The 10,000 taka first-time loan has long been one of the programme’s standard entry-level products. Women receiving 10,000 taka loans is therefore not evidence of unusual activity. It is evidence that the programme was operating according to its established design.

The arithmetic presents a further challenge to the allegation. If 11,000 crore taka had truly been distributed in loans of 10,000 taka each, the programme would have required more than 11 million recipients.

Yet RDS reportedly serves approximately 850,000 active clients. Even if all members associated with the programme are counted, the total rises only to around 1.8 million. The scale implied by the allegation is therefore difficult to reconcile with the documented size of the programme itself.

The operational indicators are equally inconsistent with the theory of a politically driven mass-distribution campaign.

If lending had been expanded for electoral purposes, one would ordinarily expect a surge in client acquisition. Yet client numbers have reportedly declined over the past two years.

One would also expect average loan sizes to fall as more borrowers were brought into the system. Instead, average loan sizes have increased. A large-scale distribution effort would likely require additional field personnel to recruit, process and monitor borrowers.

Yet staffing levels have reportedly been reduced. Member savings, meanwhile, increased by approximately 12 percent.

Taken together, these trends point not toward a rapidly expanding patronage network but toward a maturing portfolio characterised by larger average loans and stronger savings mobilisation.

Repayment performance provides another important test of the allegation. RDS reportedly maintains a recovery rate of approximately 97.5 percent. Such a figure is exceptionally high by microfinance standards and indicates that borrowers continue to repay their obligations on schedule.

This is difficult to square with the proposition that loans were distributed as political inducements with the understanding that repayment would not be required. If borrowers believed the funds were effectively grants, repayment discipline would be expected to weaken sharply. The data suggest the opposite.

Mohammad Hizbullah, Member Secretary of the political party UP Bangladesh in a facebook post pointed out that the strongest evidence against the claim may lie in the behaviour of outstanding investment balances.

Despite annual disbursement reaching approximately 8,000 crore taka in 2024-25, outstanding investment increased by only 77 crore taka. Not only is that figure small; it is the lowest annual increase recorded in the history of the programme.

Historical comparisons make the trend even clearer, Mohammad Hizbullah said.

Outstanding balances increased by approximately 1,005 crore taka in 2021-22, 885 crore taka in 2022-23 and 238 crore taka in 2023-24. In 2024-25, despite substantially higher lending volumes, the increase collapsed to only 77 crore taka.

For a lending institution, that is generally interpreted as a sign of strong recovery performance. The bank lent more money while simultaneously preventing the stock of outstanding obligations from expanding materially.

In effect, repayments kept pace with disbursements.

The evidence in the loan book

The principal area of concern in the RDS portfolio lies elsewhere. Overdue and classified loans have risen significantly in recent years.

Overdue loans, which historically averaged around 5-6 crore taka, increased to approximately 41 crore taka in 2023-24 and rose further in 2024-25. Classified loans followed a similar trajectory, reaching nearly 200 crore taka.

Yet even these figures do not necessarily support the parliamentary narrative. Loan classification is a lengthy process. A loan first becomes irregular, then overdue, then substandard, then doubtful and finally classified if recovery efforts fail over an extended period.

The classified loans appearing in 2024-25 therefore largely reflect lending decisions made years earlier, particularly during 2022-23. Loans issued during 2024-25 have not yet had sufficient time to move through the classification cycle.

Indeed, the coexistence of rising classified loans and exceptionally strong repayment performance is not necessarily contradictory. The two indicators may simply be measuring different vintages of lending. Older loans can deteriorate while newer loans perform strongly.

Taken as a whole, the publicly available evidence points toward a conclusion markedly different from the one presented in parliament.

The data suggest that the minister’s remarks may have conflated cumulative disbursement, annual lending flows and outstanding investment balances, creating an impression of extraordinary activity where the underlying numbers indicate business as usual.

The available records show a programme operating broadly within its historical growth trend, maintaining high recovery rates, expanding annual lending in line with long-term patterns and preventing a significant build-up in outstanding balances.

They show a microfinance portfolio with rising delinquency in older cohorts of loans but unusually strong repayment performance in recent years.

None of this precludes legitimate scrutiny of Islami Bank, RDS or the broader political economy surrounding Bangladesh’s banking sector. Questions of governance, ownership, regulatory oversight and political influence deserve rigorous examination.

But those debates are best conducted on the basis of financial evidence rather than rhetorical inference.

On the evidence presently available, the parliamentary claims appear to have conveyed a misleading picture of both the scale and mechanics of the RDS programme. The data do not establish that RDS experienced an extraordinary election-related lending surge.

They do not establish that the programme deviated materially from its historical trajectory. Nor do they establish that the figures cited in parliament accurately reflected the lending activity recorded in the bank’s annual reports.

What they do establish is something more prosaic: that a large revolving microfinance programme disbursed substantial sums, recovered most of them, maintained a stable portfolio and generated statistics that can easily be misunderstood when stocks, flows and cumulative totals are treated as if they were the same thing.

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