Bangladesh Bank appointed an observer to Islami Bank on Wednesday evening following concerns raised by banking executives over the ongoing situation at the country’s largest Shariah-based lender.
The central bank has assigned its Executive Director Ashraful Alam to the role. Bangladesh Bank Assistant Spokesperson Mohammad Shahriar Siddiqui said the appointment was made under powers granted by the Bank Company Act to closely monitor the bank’s overall operations and safeguard depositors’ interests as well as the public interest.
In a press release issued on Wednesday, the central bank said the observer would be allowed to attend board meetings but would not have voting rights or be able to provide opinions. However, he may explain policy matters when necessary and will submit regular reports to Bangladesh Bank.
Bangladesh Bank had previously appointed observers to Islami Bank in 2010, 2017 and 2022. The bank’s board was later restructured following political changes in the country.
Before Eid-ul-Azha, the bank’s chairman and managing director resigned. Former Deputy Governor Khurshid Alam was subsequently appointed chairman. Protests under the banner of a “Customer Forum” began in opposition to the appointment, prompting customers to withdraw nearly Tk3,000 crore from the bank.
Facing an acute liquidity shortage, Islami Bank later sought Tk10,000 crore in support from Bangladesh Bank.
Earlier on Wednesday, Association of Bankers Bangladesh (ABB) Chairman and City Bank Managing Director Mashrur Arefin urged a quick resolution to the situation, warning that the uncertainty surrounding Islami Bank could have a negative impact on the wider banking sector.
After Governor Md Mostaqur Rahman described the issue as one that had taken on political dimensions and expressed optimism that a settlement could be reached through dialogue, Bangladesh Bank announced the appointment of the observer later in the evening.
