Central Bank Extends Emergency Support

The central bank of Bangladesh has extended an additional BDT 2,500 crore in special liquidity support to Islami Bank Bangladesh PLC amid ongoing liquidity pressures and heightened withdrawal demands.

According to information confirmed by bank sources on Monday (15 June), the assistance is part of a broader stabilisation effort aimed at easing cash flow constraints faced by the private-sector lender. The move follows an earlier tranche of BDT 2,500 crore provided on Sunday, bringing the total emergency support to BDT 5,000 crore within a short span.

The liquidity strain at Islami Bank Bangladesh PLC has been linked to significant withdrawal activity by depositors earlier this month. Between 1 and 9 June, customers reportedly withdrew nearly BDT 6,000 crore, placing considerable pressure on branch-level liquidity and ATM cash availability. Internal estimates further indicate that deposits declined by BDT 4,204 crore between 1 and 7 June alone, followed by an additional withdrawal of approximately BDT 2,000 crore over the subsequent two days.

In response to the emerging situation, senior officials of the central bank, including the Governor, held a high-level meeting with top executives of Islami Bank Bangladesh PLC. The discussions included the Managing Director (in charge), two Additional Managing Directors, and six Deputy Managing Directors of the bank.

Subsequently, the central bank undertook a major administrative intervention. Acting under the Banking Companies Act, 1991—specifically Sections 45 and 47(3)—the authority dissolved the entire board of directors of Islami Bank Bangladesh PLC, including its Chairman. The Bangladesh Bank appointed its Executive Director, Md Zahir Hossain, to assume full responsibilities of the board, effectively placing the institution under direct regulatory oversight.

A central bank statement emphasised that the decision was taken in the interest of depositors, the bank, and the broader public. It further confirmed that the appointed official will exercise all powers previously held by the board under Section 47(3) of the Act.

Officials have also indicated that additional financial assistance may be considered if required, depending on the evolving liquidity situation.

Summary of Key Developments

The intervention marks one of the most significant regulatory actions in recent years concerning a major private-sector Islamic financial institution in Bangladesh, as authorities move to stabilise operations and restore depositor confidence.