Islami Bank Bangladesh PLC, the country’s largest private commercial bank, is facing a severe cash crunch following massive deposit withdrawals driven by customer panic and controversy over the appointment of its new chairman. In a swift move to stabilize the Shariah-based lender, Bangladesh Bank injected Tk 2,500 crore in emergency liquidity support on Sunday.
The intervention came after bank officials revealed that customers had been pulling out an average of Tk 1,200 crore daily over the past two working days. This rapid fund flight, accelerated by interbank transfers through Real-Time Gross Settlement (RTGS) and the National Payment Switch Bangladesh (NPSB), left the bank grappling with a net daily liquidity deficit ranging from Tk 900 crore to Tk 1,200 crore.
High-Stakes Meeting at the Central Bank
To address the escalating situation, a high-level delegation from Islami Bank, led by acting Managing Director Mo. Altaf Husain, two Additional Managing Directors (AMDs), and six Deputy Managing Directors (DMDs), held an emergency meeting with Bangladesh Bank Governor Mostakur Rahman. The closed-door discussion at the central bank’s headquarters lasted for over three hours on Sunday afternoon.
Speaking to journalists after the meeting, Altaf Husain characterized the session as a “regular business meeting,” emphasizing that the management provided detailed breakdowns of the bank’s financial status, cash flow, and asset investments to the central bank.
When asked if the raging controversy surrounding the newly appointed chairman was discussed, Husain stated:
“The appointment of the chairman was not discussed in the meeting. As part of management, we strictly focused on operational and business matters.”
The executives declined to comment on growing complexities regarding the bank’s current account deficit and Cash Reserve Ratio (CRR) shortfalls, labeling them as external or political matters beyond the scope of management.
Technical Glitches and Recovery Efforts
The bank management acknowledged recent disruptions in its popular CellFin app and online transaction systems. They explained that while internal fund transfers remained unaffected, temporary hurdles arose due to set limits on interbank transactions as liquidity tightened.
With the central account now showing a positive balance following the central bank’s financial lifeline, the bank’s IT teams are actively upgrading the system to fully restore online services. Furthermore, authorities stated that foreign remittance distribution is being handled with the highest priority and the clearing of stagnant cheques resumed on Sunday.
Urging clients not to panic, the top brass assured that service quality would steadily improve from Monday. They expressed optimism that just as in past instances where panicked customers eventually returned their funds to the bank, normalcy would soon be restored. A specialist team from Bangladesh Bank is currently auditing the financial data provided by the lender.
Chronology of the Crisis
The unfolding crisis is deeply rooted in leadership changes and subsequent public distrust that erupted over the last few weeks:
With the initial Tk 2,500 crore safety net in place and a threat from the protesters to besiege the central bank by Tuesday if their demands are not met, all eyes remain on how effectively the emergency funds will cushion the country’s largest private bank against further panic-driven withdrawals.
