Staff Reporter :
Islamic banking in Bangladesh has seen a further decline in its share of total deposits, as a crisis of confidence following widespread lending irregularities continues to weigh heavily on the sector. At the end of the first quarter of 2025, Islamic banks held deposits of just over Tk 376,163 crore.
In contrast, total deposits across all scheduled banks increased by 2.11 percent during the quarter, reaching approximately Tk 1,923,504 crore by the end of March, according to data from Bangladesh Bank.
Deposits in Shariah-based banks accounted for 19.56 percent of the total in the January-March quarter, down from 20.14 percent in the previous October-December quarter and 20.91 percent in July-September 2024, reflecting a steady erosion of market share.
Experts attribute the decline in depositor trust primarily to revelations of large-scale loan malpractices, particularly involving banks linked to the controversial S Alam Group. It is alleged that the group siphoned off nearly Tk 1 lakh crore through various accounts within these banks.
Bangladesh currently has 10 full-fledged Shariah-based banks operating in the market. These include Islami Bank Bangladesh, Al Arafah Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, First Security Islami Bank, Standard Bank, Exim Bank, Shahjalal Islami Bank, and ICB Islamic Bank. Notably, the first six banks are reportedly controlled by the S Alam Group.
At the close of March 2025, state-owned commercial banks accounted for 23.70 percent of total deposits, specialised banks for 2.84 percent, foreign banks for 4.55 percent, while private commercial banks-including Islamic banks-held the largest share at 68.90 percent.
On a year-on-year basis, total deposits grew by Tk 161,201 crore, or 9.15 percent, in March 2025, slightly below the 9.25 percent increase recorded in March 2024.
The quarterly rise in deposits was primarily driven by an increase of Tk 25,277 crore (1.94 percent) in private banks. Deposits at state-owned banks rose by Tk 12,067 crore (2.72 percent), specialised banks by Tk 2,359 crore (4.51 percent), and foreign banks by Tk 89 crore (0.10 percent).
The ongoing challenges for Islamic banks highlight the urgent need for reforms to restore depositor confidence and strengthen governance within the sector.
