BB dissolves Islami Bank board, including chairman

The Bangladesh Bank has dissolved the Board of Directors of Islami Bank Bangladesh PLC, including its chairman and all directors, citing powers vested in the central bank under Sections 45 and 47(3) of the Bank Company Act, 1991.

In a notification issued on Sunday, the central bank said the decision was made in the interest of the bank, its depositors, and the public.

Under Section 47(3) of the Bank Company Act, 1991, Bangladesh Bank Executive Director Mohammad Zahir Hossain has been appointed to exercise all powers and perform all responsibilities of the board until further notice, it added.

The decision came amid growing unrest surrounding the bank’s leadership and mounting liquidity pressure caused by large-scale deposit withdrawals.

Earlier in the day, senior Islami Bank officials, including Acting Managing Director Altaf Hossain, met Bangladesh Bank Governor Mostakur Rahman to brief him on the bank’s financial condition, liquidity situation and recent developments.

The central has provided Tk2,500 crore in special liquidity support to Islami Bank Bangladesh PLC to help the Shariah-based lender tackle a worsening cash crisis, according to bank sources.

The emergency fund was disbursed on Saturday as the bank struggles with mounting pressure following unrest over the appointment of its new chairman after the Eid-ul-Adha holidays.

Under the banner of the “Islami Bank Sachetan Grahok Forum,” a section of clients has been holding continuous protests against the appointment, sparking panic among depositors and triggering large-scale withdrawals.

The heavy cash outflow has pushed the private commercial bank into a severe liquidity shortage, leaving it unable to meet customers’ withdrawal demands.
Sources said the bank also failed to maintain its required Cash Reserve Ratio (CRR) with the central bank, further deepening the crisis.

Facing the worsening situation, Islami Bank sought Tk10,000 crore in liquidity support from Bangladesh Bank last week. In response, the central bank approved an initial Tk2,500 crore as emergency assistance.

Earlier on Friday, Mostaqur Rahman signalled possible support for the bank during a post-budget press briefing, assuring that the crisis would be resolved soon and depositors would not face difficulties accessing their funds.

“For Islami Bank, we will provide whatever emergency liquidity support is required,” the governor said, dismissing allegations of unlawful interference in the bank’s management.