Customers of shariah based Islami Bank Bangladesh (IBB), which is shattered by fund embezzling and deposits huge withdrawal Wednesday delivered a 24-hour ultimatum to the Ministry of Finance to fulfill their 6-poins demands including withdraw of its board chairman Khurshid Alom and reinstatement of terminated Managing Director and CEO Omar Faruk and other officials.
"We have collectively submitted the six-point demands of our customers to the Ministry of Finance in the form of a memorandum.
We hope that our demands will be implemented within the next 24 hours, said Professor Nur Un-Nabi, convener and spokesperson of the Consumer Forum at a press conference.
“We hope that our demands will be implemented within the next 24 hours. If our demands are not met, we will announce a larger-scale program with customers across the country," he warned.
Islami Bank Bangladesh has come under reserve pressure after customers withdrew around BDT 4,240 Crore within seven days following the appointment of Khurshid Alam as chairman. Bank officials said the cash reserve ratio dropped from above the required level to nearly BDT 2,600 Crore against a requirement of about BDT 7,000 Crore.
To manage the shortfall and maintain liquidity, the bank has sought BDT 10,000 Crore in support from Bangladesh Bank.
On 24 May, Khurshid was appointed as the bank's chairman after he lost his post as deputy governor following the July uprising 2024. He was scheduled to assume office on 1 June. Immediately after the appointment, protests under the banner of the "Islami Bank Sacheton Grahok Forum" gathered outside the bank's head office, demanding his removal.
A board meeting planned for that day could not proceed as Khurshid was unable to attend his first working day amid the demonstrations.
The central bank later directed that the meeting be held online.
On Wednesday, Bangladesh Bank governor at the Bankers’ Meeting held at the central bank expressed his concern over the situation prevailing centering the Islami Bank saying that instability in Islami Bank is impacting the entire banking sector.
“Bankers are deeply concerned because uncertainty in a major financial institution can quickly weaken confidence in the wider banking system. For that reason, he stressed that both sides should come together and settle the matter as soon as possible”, he said.
His remarks came after an extensive discussion on Islami Bank during the final session of the meeting.
Referring to the governor’s position, central bank spoke man said the issue has taken on a political dimension but added that the governor appeared firm and determined to bring the matter to a conclusion.
While the Islami Bank crisis dominated attention, in the meeting, bankers also focused on reviving credit growth, which remains one of the sector’s biggest challenges. Arefin said discussions centered on a proposed Tk600 billion special financing programme designed to stimulate lending and support economic activity.
Islami Bank Bangladesh, the country’s top rated Shariah based bank as well as one of the best bank in South Asia now shattered by panic liquidity withdrawals amid almost every day beliguard one of the best.
The bank is still reeling from a historic default crisis tied to the controversial S Alam Group, which allegedly plundered the bank during the previous regime. The group alone defaulted on over Tk 66,507 crore, pushing the bank's non-performing loans (NPLs) past Tk 1.06 lakh crore.
The bank entered this period burdened with a provision shortfall nearing Tk 70,000�"85,000 crore and a massive capital adequacy deficit. While the bank had stabilized temporarily under the interim government, it lacked the deep financial cushion to absorb a sudden, multibillion-taka cash run without external help.
As a direct consequence of the Tk 4,240 crore outflow, the bank's Cash Reserve Ratio (CRR)�"the minimum cash buffer a bank must maintain with the central bank�"plunged into negative territory. Its account balances dropped sharply from over Tk 7,015 crore down to Tk 2,600 crore, failing the regulatory requirement.
To protect the country's largest Shariah-based lender, Bangladesh Bank has appointed an observer, assured the public that the bank is not at risk of insolvency, and is actively reviewing the Tk 10,000 crore bailout request to stabilize cash flows.
Meanwhile, Islami Bank’s shares fell 9.81 percent -- just below the daily 10 percent limit set by the circuit breaker, a standard market mechanism that caps how much a share price can move in a single session.
