Bangladesh Bank Provides Emergency Liquidity

The Bangladesh Bank has extended a special liquidity support package worth BDT 2,500 crore to Islami Bank Bangladesh PLC in an effort to ease mounting short-term cash flow pressure within the institution.

The assistance was disbursed on Sunday (14 June) as part of a broader stabilisation measure following rising concerns over the bank’s ability to meet sudden withdrawal demands. According to officials and sector-related sources, the bank had earlier sought a much larger liquidity backstop of BDT 10,000 crore from the central bank, citing intensified stress on its available cash reserves.

The liquidity strain reportedly emerged after a sharp rise in customer withdrawals in recent weeks. Market observers attribute the pressure partly to uncertainty surrounding recent administrative changes, including the appointment of a new chairman after the Eid holiday period. This development was followed by public demonstrations organised under the banner of a group identifying itself as “Concerned Customers Forum”, which opposed the appointment and staged a series of protests.

As public sentiment fluctuated, a significant number of depositors reportedly began withdrawing funds, further tightening liquidity conditions at the bank. The situation escalated to the point where the institution faced difficulties meeting day-to-day cash demands in certain branches.

Compounding the challenge, the bank also struggled to comply with the central bank’s Cash Reserve Requirement (CRR), a regulatory obligation mandating a minimum level of reserves to be maintained with the central bank. Failure to maintain this buffer added urgency to the need for external support.

Officials indicate that the partial disbursement of BDT 2,500 crore represents the first phase of the requested assistance, with further support potentially considered depending on the bank’s evolving liquidity position. The central bank has emphasised that the objective of the intervention is to stabilise short-term funding pressures and restore depositor confidence.

Earlier, in a post-budget press briefing held on Friday, Bangladesh Bank Governor Mustafa Murshedul Islam signalled that necessary liquidity support would be arranged for the institution. He also reassured that the ongoing strain was expected to be temporary and that depositors would not face difficulties in accessing their funds.

Liquidity Support Overview

The central bank’s intervention is expected to provide immediate breathing space to the country’s largest Islamic commercial lender, while broader monitoring continues to assess whether further liquidity injections will be required to fully normalise operations.