Islami Bank seeks Tk10,000cr amid withdrawal pressure

Islami Bank Bangladesh PLC has sought Tk10,000 crore in special liquidity support from Bangladesh Bank (BB) after facing severe withdrawal pressure triggered by unrest surrounding the appointment of its new chairman.
According to senior bank officials, customer withdrawals surged over the past several days following the appointment of former BB deputy governor Md Khurshid Alam as chairman. 
The sharp increase in cash withdrawals has pushed the bank into liquidity stress and caused its Cash Reserve Ratio (CRR) to fall below the regulatory requirement.
Bank sources said that during the five working days after Eid until last Sunday, withdrawals exceeded deposits by nearly Tk4,300 crore. In the last seven days alone, customers reportedly withdrew around Tk4,240 crore from branches nationwide.
Officials believe the withdrawals were largely driven by uncertainty and panic among a section of customers following recent developments at the bank.
A senior official said Islami Bank had maintained its CRR above the required level before the appointment of the new chairman. However, the recent withdrawal pressure significantly weakened its reserve position.
“We had a requirement of around Tk7,000 crore and were maintaining more than that. Due to the current situation, it has fallen to Tk2,600 crore. However, our current account with Bangladesh Bank remains positive,” the official said.
The Cash Reserve Ratio is the portion of customer deposits that banks are required to keep with the central bank in cash. In Bangladesh, banks must maintain an average CRR of 4%.
Sources said the bank has again failed to maintain the required CRR because of the increased withdrawal of deposits. Consequently, it formally applied to the central bank on Monday for Tk10,000 crore in special liquidity assistance.
Another bank official said Islami Bank still has funds in its account with BB, but the request was made as a precautionary measure to ensure smooth liquidity management.
The bank's troubles began surfacing in 2022 amid allegations of widespread irregularities and corruption. Following the fall of the Awami League government in August 2024, the banking regulator intensified efforts to restore governance and stability at the institution.
Since 2017, Islami Bank had been under the control of the S Alam Group. During the tenure of the interim government, the bank's board was reconstituted. 
More recently, both the former chairman and managing director were reportedly forced to resign, according to allegations raised by some stakeholders.
Former chairman Prof Dr M Zubaidur Rahman stepped down on 24 May. On the same day, BB appointed former deputy governor Md Khurshid Alam as the bank's new chairman. Alam had resigned from his position as deputy governor following the fall of the Sheikh Hasina government on 5 August, 2024.
His appointment drew opposition from a section of customers and shareholders. Under the banner of the Conscious Customers' Forum, protesters launched a movement on 1 June demanding the cancellation of his appointment.  
BB monitoring situation
BB says it is closely monitoring the situation at Islami Bank and has assured depositors that there is no risk of the bank becoming insolvent. 
The central bank also urged customers not to withdraw their money out of panic. BB Assistant Spokesperson Mohammad Shahriar Siddiqui said the central bank is closely observing whether customers are withdrawing cash due to panic or shifting their deposits to other banks.
Reassuring customers, he said Islami Bank is not in such a financially distressed condition that it would be unable to repay depositors on demand.
He noted that the bank faced similar pressure in August 2024 and managed to overcome the situation with support from the central bank. 
Bangladesh Bank, he added, would provide necessary liquidity assistance again if required.