Muhammad Tareq ; Dhaka – In a major move to mitigate a severe liquidity crunch, Bangladesh Bank has extended a special loan of BDT 2,500 crore to Islami Bank Bangladesh PLC.
The central bank finalized the decision on Sunday morning, injecting the funds directly into Islami Bank’s current account to resume its halted check clearing services.
According to sources within both banks, the financial intervention became critical as Islami Bank faced an unprecedented surge in cash withdrawals against negligible deposits.
“The demand for cash has skyrocketed. Deposit inflows have virtually dried up as everyone is scrambling to withdraw their money,” a top Islami Bank official stated on condition of anonymity.
“Had this situation persisted, we would have had no choice but to shut down branches. Immediate intervention was vital to restore customer confidence.”
Back-to-Back Turmoil and Management Shakes
The liquidity crisis deepened following a wave of leadership restructuring. Ahead of Eid-ul-Azha, the bank’s former chairman, M Zubaydur Rahman, resigned on May 24.
Later that night, the central bank appointed its former deputy governor, Md. Khurshid Alam, as an independent director and the new chairman.
Currently, the central bank-appointed independent directors hold five key positions, including the chairmanship. However, the appointment triggered widespread protests.
Under the banner of the “Conscious Customer Forum,” a group of account holders has been staging demonstrations demanding the removal of the new chairman alongside a 7-point list of demands.
The issue also triggered heated debates between treasury and opposition benches in the National Parliament, further fueling panic among general depositors and sparking aggressive withdrawal trends.
To stay afloat, Islami Bank initially requested a BDT 10,000 crore financial lifeline from Bangladesh Bank.
Protests Continue at Islami Bank Tower
On Sunday morning, protestors from the Conscious Customer Forum gathered outside the Islami Bank Tower, holding a sit-in program to reiterate their demands.
The forum has also announced plans to submit a formal memorandum to the Governor of Bangladesh Bank on Tuesday, pushing for the chairman’s immediate resignation.
The Legacy of S. Alam Group
Islami Bank’s financial stability was heavily compromised in 2017 when the S. Alam Group—a conglomerate closely tied to the ousted Awami League government—took control of the bank by purchasing shares under various names.
Allegations persist that the Directorate General of Forces Intelligence (DGFI) assisted in the forceful takeover.
Following the student-led mass uprising in August 2024 that brought down the Awami League regime, the bank was freed from S. Alam’s control, and central bank representatives took over its management.
Currently, over 50% of Islami Bank’s total loans have turned into non-performing loans (NPLs), a massive portion of which was allegedly embezzled by the S. Alam Group through anonymous accounts.