Bangladesh Bank Dissolves Islami Bank Board Amid Liquidity Crisis

The Bangladesh Bank (BB) has dissolved the Board of Directors of Islami Bank Bangladesh PLC to safeguard the interests of the bank, its depositors, and the public.

According to a statement issued Sunday, the central bank canceled the appointments of all directors of the country's largest Shariah-based bank by exercising its authority under Sections 45 and 47(3) of the Bank Company Act 1991.

Mohammad Zahir Hossain, an Executive Director of the central bank, has been appointed to act as the board's administrator. He will carry out all board functions and responsibilities until a new governing body is formed.

Liquidity Support Amid Escalating Crisis Earlier on Sunday, Bangladesh Bank injected Tk 25 billion into the cash-strapped bank to help ease a severe liquidity crunch. BB spokesperson Arief Hossain Khan confirmed the disbursement, noting it is the first tranche of a Tk 100 billion assistance package the bank recently requested to overcome its cash starvation.

The crisis deepened following protests that erupted after the Eid-ul-Azha holiday over the appointment of the bank's new chairman, Md. Khurshed Alam. Operating under the banner of the 'Islami Bank Conscious Customers' Forum,' individuals claiming to be clients began demonstrating on June 1.

The continuous agitation triggered panic withdrawals, rapidly deteriorating the bank's liquidity position. In recent days, net cash withdrawals have surged to approximately Tk 12 billion a day. Consequently, the bank has reportedly struggled to maintain its requisite Cash Reserve Ratio (CRR) with the central bank.

Central Bank Briefing Later on Sunday, an Islami Bank delegation—comprising the acting managing director, two additional managing directors, and six deputy managing directors—briefed BB Governor Md. Mostaqur Rahman on the escalating situation.

An Islami Bank official, speaking anonymously, confirmed the bank is struggling to manage the intensifying withdrawal trend. While they have managed to settle current demands, the severity of the crisis prompted them to seek help. "That's why we appealed to the central bank, the lender of last resort," the official said.

During the meeting, the Governor requested a detailed account of how the newly provided funds are being utilized, which the delegation supplied.