Bangladesh Bank has removed a statutory time limit that restricted how long it could keep a bank under an arrangement imposed after dissolving its board, allowing the central bank to retain control over Islami Bank Bangladesh beyond two years.
The move comes after Islami Bank remained under Bangladesh Bank-appointed management for more than two years following the dissolution of its board in August 2024.
Bangladesh Bank issued a notification on Monday, signed by Deputy Governor Md Kabir Ahmed, declaring that the provision under Section 47(2) of the Bank Company Act, 1991, concerning the tenure of an order dissolving a bank’s board “shall not generally apply to all bank companies.”
Section 47(2) had limited the duration of such an order, including any extensions, to a maximum of two years.
With the exemption, the two-year limit will no longer generally prevent Bangladesh Bank from continuing to run a bank through an appointed person or another arrangement after dissolving its board.
The decision comes as Islami Bank, one of the country’s largest private commercial banks, has remained under Bangladesh Bank’s control for more than two years since its board was dissolved in August 2024.
Following the fall of the Awami League government amid the student-led mass uprising in 2024, Bangladesh Bank dissolved and reconstituted the boards of 12 banks as part of a broader banking-sector reform drive. Several of them had been under the control of S Alam Group.
Besides Islami Bank, boards of Al-Arafah Islami Bank, National Bank, IFIC Bank, EXIM Bank, First Security Islami Bank, Global Islami Bank, Union Bank, NRBC Bank and Social Islami Bank, among others, were reconstituted. In most cases, Bangladesh Bank initially installed independent directors to run the banks.
The ownership and governance structures of several of those banks have since changed again. Shareholder directors have returned to National Bank, while the boards of Premier Bank and several others have been reconstituted with sponsor and shareholder directors.
EXIM Bank, First Security Islami Bank, Global Islami Bank, Union Bank and Social Islami Bank have meanwhile been merged to form Sammilito Islami Bank PLC. Three of the five banks have already been brought under the new bank’s management, while the transfer of the remaining two is under way.
Control of Al-Arafah Islami Bank has also been returned to sponsor directors.
Islami Bank, however, has followed a different course. No sponsor or shareholder director has returned to its board since Bangladesh Bank dissolved it in August 2024.
The central bank ran Islami Bank through independent directors until June. The bank currently has no board of directors or independent directors, with a Bangladesh Bank official exercising all powers and responsibilities of the board.
The bank’s latest half-yearly financial statements were also approved by the Bangladesh Bank-appointed official and Islami Bank’s managing director instead of a board.
By the latest move, Bangladesh Bank is no longer generally required to end such an arrangement within two years after dissolving a bank’s board, allowing its current control over Islami Bank to continue beyond the previous statutory limit.
