Bangladesh’s Islamic banking sector has finally breathed easier after months of turbulence, with liquidity conditions improving sharply in the April–June quarter of 2025.
According to Bangladesh Bank data, excess liquidity of Shariah banks, including windows and branches of conventional banks, almost doubled within three months, rising to Tk119.90 billion in June from Tk 62.06 billion in March.
The increase of Tk 57.84 billion, or 93 percent, marks the strongest quarterly rebound in recent years. Compared to June 2024, liquidity was also higher by Tk 15.99 billion, or 15 percent.
The turnaround was most striking at Islami Bank Bangladesh PLC, which rose from Tk 5 billion in liquidity in March to a surplus of nearly Tk 19 billion by June.
Al-Arafah Islami Bank PLC also expanded its cushion to Tk 15 billion, up from Tk 4 billion three months earlier.
Shahjalal Islami Bank PLC maintained one of the largest buffers with Tk 20 billion, slightly down from the previous quarter.
Standard Bank PLC and EXIM Bank PLC each held around Tk 5 billion.
Union Bank PLC and Social Islami Bank PLC remained in deficit, with shortfalls of Tk 5 billion and Tk 9 billion, respectively.
Global Islami Bank, First Security Islami Bank, and ICB Islamic Bank remained in deficit.
In this situation, full-fledged Shariah banks, branches, and windows of conventional banks strengthened liquidity. Branches increased their surplus to Tk 35.36 billion in June from Tk 21.83 billion in March, while windows rose to Tk 32.76 billion from Tk 18.19 billion. Together, they added more than Tk 27 billion to the sector’s cushion.
According to Bangladesh Bank’s latest report, liquidity stress in earlier quarters stemmed from irregularities, mismanagement, and weak governance in several banks.
The central bank responded by dissolving boards of troubled institutions, restructuring management, and introducing facilities such as the Islamic Banks Liquidity Facility, Mudarabah Liquidity Support, Special Liquidity Support, and the Liquidity Support Guarantee, which enables stronger banks to backstop weaker ones.
The measures helped restore confidence and stabilise liquidity. But a Bangladesh Bank official warned that the recovery remains fragile, with mid-sized players still struggling and the sector’s strength concentrated in a handful of large banks.
Islamic banks handled exports worth Tk 404.67 billion in April–June, up nearly 10 percent from the previous quarter and more than 43 percent year-on-year. Al-Arafah Islami Bank PLC led export earnings, followed by Shahjalal Islami Bank PLC and Islami Bank Bangladesh PLC.
Imports, however, stayed subdued at Tk 519.69 billion, slightly lower than in March but higher than a year earlier. Al-Arafah and Islami Bank Bangladesh together accounted for more than half of these payments. The trade gap remained wide, with imports exceeding exports by Tk 115 billion.
While deposits grew strongly, the number of investment account holders slipped. Accounts fell to 1.52 million in June from 1.54 million in March. Full-fledged Islamic banks saw a decline from 1.47 million to 1.45 million, though branches of conventional banks edged up from 30,000 to 40,000.
The fall in investment accounts contrasts with growth in depositors, which climbed to more than 39 million, reflecting strong savings mobilisation despite weaker lending participation.
