Bangladesh Bank appoints observer to Islami Bank amid unrest

Bangladesh Bank today once again appointed an observer at Islami Bank Bangladesh PLC amid ongoing unrest at the country's largest private bank, triggered by the banking regulator's appointment of a new chairman for the bank.

The central bank appointed Md Ashraful Alam, one of its executive directors, under the powers vested in it by the Bank Companies Act, 1991.

Earlier, in December 2022, Bangladesh Bank had appointed an observer at the country's largest Shariah-based bank.

Mohammad Shahriar Siddiqui, director and assistant spokesperson of Bangladesh Bank, confirmed the development.

He said the appointment had been made to closely monitor the bank's overall operations, safeguard the interests of the institution, protect depositors and ensure the greater public interest.

As an observer, Ashraful Alam will participate in meetings of the bank's board of directors and other relevant activities, and provide Bangladesh Bank with necessary information and observations regarding the bank's operations, he added.

Bangladesh Bank remains committed to ensuring stability, good governance, transparency and accountability in the country's banking sector, the spokesperson said, adding that the appointment of an observer at Islami Bank Bangladesh PLC is expected to further strengthen confidence and discipline in the bank's operations.

On May 24, the eve of the nearly week-long Eid-ul-Azha holiday, Bangladesh Bank appointed Md Khurshid Alam, a former deputy governor, as chairman of Islami Bank PLC, just hours after the previous chairman resigned.

Khurshid was among the senior Bangladesh Bank officials who were forced to leave the central bank by more than 100 protesting officials on August 6, 2024, a day after the fall of the Sheikh Hasina government following the July uprising.

The appointment has sparked unrest at the bank since June 1, and the situation remains unresolved. Due to the ongoing turmoil, the bank, which had staged a turnaround during the interim government's tenure, is facing mounting pressure from deposit withdrawals.

On Monday, the bank sought a special liquidity support facility of Tk 10,000 crore from Bangladesh Bank as the country's largest Shariah-based lender reeled from a surge in deposit withdrawals.

Between June 1 and June 7, deposit withdrawals from the bank amounted to Tk 4,241 crore.