New Islami Bank Chief Reassures Anxious Depositors

The newly appointed interim Chairman of Islami Bank Bangladesh PLC, Mohammad Zahir Hossain, has urged depositors to move past two weeks of intense volatility at the Shariah-based lender. Speaking at a press briefing upon assuming office, Hossain, who is also an executive director at Bangladesh Bank (BB), sought to restore public trust. He stated, “Continue your transactions without hesitation and keep faith in the bank.”

Hossain is temporarily acting as a one-member board to guarantee operational continuity during this transitional phase. He announced that a rigorous vetting process is underway to establish a qualified, completely neutral, five-member board of directors. “We want to appoint people who can manage the bank efficiently. Hopefully, you will soon see a balanced and independent board,” he added.

Dissolution of the Previous Board

The regulatory intervention occurred following substantial deposit withdrawals, public demonstrations, and political friction. This instability escalated after Md Khurshid Alam, a former deputy governor of Bangladesh Bank, was appointed chairman. In response to mounting liquidity stress and protests, the central bank dissolved Islami Bank’s entire board of directors.

Representing the Conscious Customers Forum, Nur Nabi Manik described the dissolution as an “initial victory”. The forum, which had been demonstrating against Alam’s appointment since 1 June, presented a seven-point demand. These demands included:

• The formation of a professional board via thorough consultation.

• The reinstatement of Md Omar Faruk as Managing Director.

• The return of shares allegedly seized forcibly from previous owners.

The forum confirmed plans to submit a formal memorandum outlining these demands to the Bangladesh Bank Governor. However, Chairman Hossain clarified that Faruk cannot be reinstated. “As his resignation has been accepted, there is no scope for bringing him back,” Hossain confirmed.

Central Bank Support and Account Reactivation

To alleviate the cash flow strains caused by panicking depositors, Bangladesh Bank provided an additional 2,500 crore Taka in emergency liquidity support. According to Islami Bank’s Acting Managing Director, Md Altaf Hossain, withdrawal pressures have begun to ease. He noted that account closures at a major branch dropped by roughly 75 per cent, indicating a steady return of consumer confidence.

Furthermore, an internal circular issued by the bank outlines a strategy to reactivate accounts closed prematurely due to the panic. The criteria and parameters for this reactivation drive are detailed below:

Banking Sector Response

The central bank’s swift action to restructure the institution has drawn formal support from the broader financial sector. The Association of Bankers, Bangladesh (ABB) welcomed the decision, calling it both timely and prudent.

ABB Chairman Mashrur Arefin revealed that the association had formally communicated its systemic anxieties to the central bank governor on 10 June, highlighting that the crisis had acquired political overtones. The ABB emphasized that the spillover effects of the panic were being felt across the wider banking industry. The association expressed optimism that the intervention would successfully restore corporate governance, curb political interference, improve defaulted loan recovery, and rebuild essential stakeholder confidence.