Bangladesh Bank‑appointed head of Islami Bank Bangladesh PLC has pledged to restore depositor confidence and normal operations after the central bank dissolved the lender’s entire board, in a bid to contain a crisis that has already triggered withdrawals of about Tk9,300 crore.
Mohammad Zahir Hossain, the Bangladesh Bank executive director now exercising all powers of the board, said the regulator’s immediate priority was to stabilise the institution, reassure depositors and return the bank to normal operations.
“We are taking all necessary measures to ensure that the bank’s activities continue normally,” he said while speaking to the reporters at Islami Bank’s headquarters on Monday.
His comments came a day after Bangladesh Bank removed Chairman Md Khurshid Alam and all other directors under the Bank Company Act and assumed direct control of the country’s largest Shariah-based lender, one of the most significant regulatory interventions in Bangladesh’s banking sector in recent years.
The central bank’s move followed weeks of depositor withdrawals, political controversy and growing uncertainty surrounding the bank’s leadership.
According to bank officials, more than Tk6,000 crore left the bank between 1 June and 9 June. A further Tk900 crore was withdrawn on 10 June, while net withdrawals reached around Tk1,200 crore each on Thursday and Sunday, taking total recent outflows to roughly Tk9,300 crore.
The bank subsequently sought Tk10,000 crore in special liquidity support from Bangladesh Bank and received Tk2,500 crore on Sunday.
The regulator is now attempting to achieve something more difficult than providing liquidity: restoring trust.
Zahir Hossain said Bangladesh Bank would soon form a five-member committee to recommend a new and neutral board.
“The primary objective is to protect depositors’ interests and restore their confidence,” he said, adding that depositors are effectively the institution’s most important stakeholders.
In a deliberate attempt to reassure customers, he stressed that the central bank retained confidence in the existing management team and that day-to-day operations would continue under Acting Managing Director Altaf Hossain.
“The board’s role is policy direction. The management will continue to run the bank,” he said.
The message from both the regulator and management was clear: customers should not interpret the board’s removal as a sign of institutional instability.
Indeed, bank officials claim the first signs of stabilisation are already emerging.
Acting Managing Director Altaf Hossain said withdrawal pressure began easing after the board was dissolved.
According to him, many customers who initially arrived at branches intending to withdraw money changed their minds after learning of the central bank’s intervention.
He said requests to close accounts had fallen by around half.
The bank has also not fully utilised the Tk2,500 crore liquidity support received on Sunday and expects another Tk2,500 crore from Bangladesh Bank, suggesting immediate liquidity pressures may be easing.
Altaf further said cash shortages that had disrupted some services were gradually being overcome and that digital banking channels, including electronic transfers and mobile banking services, were returning to normal.
Yet the crisis that prompted the intervention has not disappeared.
On the same day, Jamaat-e-Islami-backed Islami Bank Conscious Customers Forum held a separate press conference and reiterated its seven-point demand, including reinstatement of former managing director Omar Faruk Khan.
Forum leaders argued that the central bank’s decision to dissolve the entire board was unilateral and warned that the move could further undermine confidence among some customers.
They also renewed demands for the recovery of funds allegedly siphoned from the bank during the years when the institution was controlled by the S Alam Group.
The continuing protests illustrate the central challenge facing Bangladesh Bank.
While the regulator has succeeded in asserting control over the institution, it has not yet resolved the political and governance disputes that helped fuel the confidence crisis in the first place.
Those unresolved issues also extend to asset recovery.
Asked about repeated failures to auction assets linked to S Alam Group, Altaf Hossain said the bank had struggled to attract buyers because many of the assets were exceptionally large.
In at least one case, he said, a potential sale collapsed after the property became linked to a separate Anti-Corruption Commission investigation.
Zahir Hossain declined to comment on ongoing court proceedings involving ownership disputes, shares and asset recovery efforts, saying such matters would ultimately be determined through judicial processes and regulatory investigations.
For Bangladesh Bank, however, the immediate concern lies elsewhere.
Islami Bank controls roughly 8.7 per cent of Bangladesh’s banking assets, making it one of the country’s most systemically important lenders.
Any prolonged loss of confidence could have implications far beyond a single institution, particularly at a time when the broader banking sector remains burdened by record non-performing loans and weak depositor confidence.
That is why the board dissolution matters.
The central bank has moved beyond monitoring the crisis, beyond providing liquidity and beyond issuing reassurances. It has now assumed direct control of the country’s largest Islamic bank in an effort to stop a confidence shock from spreading through the wider financial system.
