Bangladesh Bank has provided Tk2,500 crore in liquidity support to Islami Bank Bangladesh PLC, offering temporary relief to the country’s largest private Islamic lender as it struggles to cope with mounting withdrawal pressure following a sharp decline in deposits.
Officials familiar with the matter confirmed that the central bank released the funds on Sunday, days after Islami Bank formally sought Tk10,000 crore in special liquidity assistance.
A senior Bangladesh Bank official told TIMES that the support was approved to help the bank meet customers’ cash withdrawal demands and maintain confidence in the banking system.
“The bank requested Tk10,000 crore in support last Tuesday (9 June). Bangladesh Bank has initially provided Tk2,500 crore as liquidity support. The situation will continue to be monitored,” the official said.
The assistance comes after Islami Bank reported a deposit outflow exceeding Tk6,000 crore between 1 June and 9 June amid growing uncertainty among depositors and protests surrounding the appointment of the bank’s new chairman.
According to bank officials, deposits declined by Tk4,204 crore between 1 June and 7 June, while customers withdrew another roughly Tk2,000 crore over the following two days.
The withdrawal pressure intensified after the resignation of former chairman M Zubaidur Rahman on 24 May and the subsequent appointment of former Bangladesh Bank deputy governor Md Khurshid Alam as the bank’s new chairman later the same day.
Since then, the Jamaat-e-Islami-backed Islami Bank Conscious Customers Forum has been staging demonstrations at the bank’s head office in Dilkusha and at branches across the country, demanding the removal of the chairman and reinstatement of former managing director Omar Faruk Khan.
The protests and competing narratives surrounding the bank’s governance have fuelled concerns among some depositors, prompting a fresh wave of cash withdrawals.
Bank officials said the sudden outflow created liquidity pressure at several branches and ATM booths, forcing the lender to seek support from the central bank.
The latest assistance marks another instance of Bangladesh Bank stepping in to support Islami Bank, which remains burdened by a large volume of non-performing loans accumulated during the years when the bank was controlled by S Alam Group.
Although the bank had shown signs of stabilisation after the political transition of August 2024 and the subsequent restructuring of its board, the recent governance dispute has triggered a new confidence challenge.
Banking sector analysts say the immediate liquidity support may help the bank meet short-term withdrawal demand, but restoring depositor confidence will ultimately determine whether the withdrawal pressure subsides in the coming weeks.
