‘Banking sector shakens as IBBL crisis deepens’
The Association of Bankers, Bangladesh (ABB), the apex body of chief executives of the country’s banks, has expressed deep concern over the ongoing turmoil at Islami Bank Bangladesh PLC (IBBL), warning that the crisis has spread well beyond a single institution and is now unsettling the broader banking sector.
The warning came Wednesday after ABB Chairman and City Bank Managing Director Masrur Arefin met Bangladesh Bank Governor Md. Mostakur Rahman at the central bank. The discussion on Islami Bank was taken up outside the regular agenda of the routine bankers’ meeting.
“The situation at Islami Bank is not just one institution’s problem — its effects are being felt across the entire banking sector,” Arefin told reporters after the meeting. “Bankers are concerned. The Governor himself views this not merely as a banking sector issue but as a political one, and efforts are under way to reach a negotiated settlement among the parties involved.”
The Governor, Arefin said, has taken a firm stance on ensuring good governance across the sector and has urged bank chief executives not to yield to political pressure. He also directed banks to provide accurate data to the Credit Information Bureau (CIB).
Central Bank Steps In: Observer Appointed
In a direct regulatory intervention, Bangladesh Bank on Wednesday appointed its Executive Director Mohammad Ashraful Alam as observer at Islami Bank — a move the central bank says is intended to closely monitor the bank’s overall operations, protect depositors’ interests and safeguard broader public interest.
Alam will attend board meetings and other relevant activities of the bank and will report his findings and observations to Bangladesh Bank as required. The central bank expressed hope that the appointment would help restore confidence and discipline in the bank’s functioning. The move signals that regulators are no longer content to watch from the sidelines as the ownership and governance dispute drags on.
Parliament Erupts Over Ownership Battle
The unrest at Islami Bank has now spilled into the national parliament, where senior leaders from both the government and the opposition have engaged in one of the longest debates over a specific financial institution since the political transition of August 5.
The opposition has alleged that shares in Islami Bank — seized by the S Alam Group under the previous Awami League government through state agencies — are not being returned to their rightful owners. Instead, they charge, the current government is installing associates of S Alam and other controversial figures in top positions at the bank. The government has pushed back, insisting the measures are transitional steps aimed at revitalising the bank and restoring shares to their legitimate owners through due legal process.
Tk 60,000cr Fund for SMEs; Trade Data Gaps Flagged
Beyond the Islami Bank crisis, Wednesday’s meeting also addressed credit flow in the economy. Arefin said the government and Bangladesh Bank have jointly initiated a new Tk 60,000 crore fund to extend loan support to small, medium and micro entrepreneurs, to be disbursed through the central bank’s refinancing scheme.
The meeting also flagged persistent inaccuracies and delays in reporting export and import data, which are distorting national accounts. Significant discrepancies have been found in declared import values, Arefin noted, and the meeting emphasised the need to verify prices through international platforms and the internet before opening letters of credit — to prevent the country from losing foreign exchange through over-invoicing.
The meeting was attended by the managing directors of all scheduled banks alongside Bangladesh Bank’s deputy governors and senior officials.
Islami Bank, the country’s largest private bank by deposits, has been mired in controversy since the S Alam Group consolidated control over it in recent years, reportedly with state backing under the previous government. After the political changeover in August last year, questions over the bank’s ownership, management and governance have remained unresolved, feeding the current standoff that bankers and regulators are now scrambling to contain.
