Bangladesh Bank lends Tk 25 billion to Islami Bank to ease crisis

Bangladesh Bank has extended a special loan of Tk 25 billion (2,500 crore) to Islami Bank to help the bank overcome a liquidity crisis. The central bank took the decision today, Sunday morning.

The funds have been credited to Islami Bank’s current account with Bangladesh Bank, allowing cheque clearing operations to resume, according to sources both at the Bangladesh Bank and the Islami Bank.

A senior Islami Bank official said demand for cash had risen sharply. “Deposits are almost non-existent, while everyone wants to withdraw money. If this situation continues, there will be no option but to keep branches closed. Quick decisions are needed to restore customers’ confidence,” the official said.

All five directors of Islami Bank, including the chairman, are independent directors appointed by Bangladesh Bank. On 24 May, the last working day before Eid-ul-Azha, then chairman M Zubaidur Rahman resigned.

Later that night, at 9:00 pm, former Bangladesh Bank deputy governor Md Khurshid Alam was appointed as an independent director and the bank’s new chairman. Since then, protests have been taking place under the banner of the Conscious Customers’ Forum, which has put forward a seven-point demand, including the removal of the chairman.

Islami Bank also became the subject of heated debate between the government and opposition parties in the National Parliament. Amid the controversy, customers have increasingly sought to withdraw their deposits. To manage the situation, the bank requested a Tk 100 billion (10,000 crore) loan from Bangladesh Bank.

On Sunday morning, a group of customers under the banner of the Conscious Clients’ Forum staged a sit-in programme in front of Islami Bank Tower, reiterating their seven-point demand, including the chairman’s resignation.

The group also announced plans to submit a memorandum to the Bangladesh Bank governor on Tuesday calling for the chairman’s removal.

In 2017, S Alam Group, an industrial conglomerate considered close to the then Awami League government, acquired control of Islami Bank through share purchases made under various names, both directly and indirectly. Allegations persist that the Directorate General of Forces Intelligence (DGFI) assisted in the takeover.

Following the fall of the Awami League government during the student-led mass uprising in August 2024, the bank was freed from S Alam Group’s control. Since then, representatives of Bangladesh Bank have been overseeing its operations.

More than 50 per cent of Islami Bank’s loans are now classified as non-performing, with a large portion of those loans reportedly linked to S Alam Group through direct and indirect borrowing arrangements.