Panic Drives Tk 5,400 Crore Withdrawals from Islami Bank in 9 Days
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Withdrawal pressure at Islami Bank has increased abnormally. In just nine days, customers withdrew more than Tk 5,400 crore. During the same period, fresh deposits stood at only Tk 50-60 crore. As a result, the country’s largest private-sector bank is facing a liquidity crisis and struggling to manage its cash position. To cope with the situation, the bank on Tuesday requested Tk 10,000 crore in loans from Bangladesh Bank.
According to officials, the appointment of Khurshid Alam as the new chairman of Islami Bank has triggered unrest and panic among customers. They said that if the current rate of withdrawals continues, the bank may eventually be unable to meet all cash demands. Many sector insiders also raised concerns that even if the chairman is replaced to stabilize the situation, customer confidence may not be restored in time.
Khurshid Alam, a former deputy governor of Bangladesh Bank and known associate of Chattogram-based businessman S Alam, was recently appointed chairman of Islami Bank.
Sources said his appointment created panic among customers, leading to ongoing protests under the banner of the ‘Conscious Customers Forum’ demanding his resignation. In this situation, a rush to withdraw deposits has spread across bank branches.
Officials said although Khurshid Alam was appointed on May 24, the impact began after the bank reopened on June 1 following Eid holidays. Within nine days, customers withdrew around Tk 5,400 crore. As a result, Islami Bank’s cash reserve ratio (CRR) held with Bangladesh Bank has turned negative from a previously positive position. CRR refers to the portion of a bank’s total deposits that must be maintained in cash with the central bank. Currently, banks are required to maintain an average CRR of 4 percent.
Officials warned that if the situation continues, the bank will suffer losses, and depositors will also be affected. They added that in such cases, Bangladesh Bank will refer to legal provisions when addressing claims from affected customers, calling it harmful for both the economy and the government.
Acting Managing Director of Islami Bank, Md. Altaf Hossain, acknowledged that some customers are attempting to withdraw their deposits. He urged depositors not to panic, saying there is no reason for immediate concern.
Bangladesh Bank Assistant Spokesperson Mohammad Shahriar Siddiqui said, “We are monitoring Islami Bank. We are observing whether customers are withdrawing cash or transferring funds to other banks. The bank is not in a position where it cannot meet customer demand. Even if Islami Bank faces a liquidity shortage, the central bank will provide support.”
A senior Islami Bank official, speaking on condition of anonymity, said that before Khurshid Alam’s appointment, the bank’s CRR was above the regulatory requirement. However, in the past week, panic-driven withdrawals pushed the CRR into negative territory on Monday.
He added that the bank’s required liquidity level is around Tk 7,000 crore, and it had maintained more than that previously. But due to the current crisis, reserves have fallen to Tk 2,700 crore. For this reason, the bank has sought Tk 10,000 crore in liquidity support from Bangladesh Bank.
Khurshid Alam was appointed chairman of Islami Bank after former chairman Zobaidur Rahman resigned on May 24. After the fall of the Sheikh Hasina government on August 5, 2024, Khurshid Alam resigned from his post as deputy governor amid protests at Bangladesh Bank. Following August 5, the board of Islami Bank was reconstituted, and Obaidullah Masud was made chairman. Customers had also protested against him, but Bangladesh Bank did not act at the time. He was later jailed in a corruption case.
Meanwhile, protests demanding cancellation of Khurshid Alam’s appointment continued for the ninth consecutive day yesterday under the banner of the Islami Bank Customers Forum. Thousands of male and female customers staged a sit-in in front of the bank’s head office, demanding his removal from the chairman’s post.
