Islami Bank: Over Tk 12,000 crore withdrawn in 15 days

Following the recent appointment of Khurshid Alam as Chairman of Islami Bank, concerns and unease have arisen among various quarters. Protests have been ongoing since June 1, demanding the cancellation of the Chairman's appointment under the banner of customers. At the same time, many panicked customers have rushed to withdraw their money. The situation took a dramatic turn on Sunday. At that point, check clearing, fund transfers, and cash withdrawal limits at branches and ATMs were strategically restricted. Despite assurances from the authorities that deposits remained safe, the situation instead compounded.

Understanding the gravity of the situation, the bank's Chairman and the entire board were dissolved on Sunday night. This brought relief to customers and other stakeholders. As of yesterday, customers had withdrawn Tk 12,600 crore. During this period, approximately Tk 200 crore was deposited.

Islami Bank announced that customers who closed or cashed out their MTDR, MSB, MMPDS, or MSA accounts prematurely between June 1 and June 15, suffering financial losses, will have their accounts considered active if they reopen them within the next seven working days. The bank will waive all associated costs.

According to sources, Khurshid Alam, a former Deputy Governor of Bangladesh Bank widely known as a close associate of Chattogram-based controversial businessman S. Alam, was recently appointed Chairman of Islami Bank. His appointment caused widespread panic among the bank's customers. Protests, under the banner of the Conscious Customer Forum, have been demanding Khurshid Alam's resignation over allegations of being an associate of S. Alam. In this context, a rush to withdraw funds began.

Although Khurshid Alam's appointment took place on May 24, its impact began to be felt after the bank opened following the Eid holiday break on June 1. Over the past 15 days, customers have withdrawn more than approximately Tk 12,600 crore from the bank. As a result, Islami Bank's Cash Reserve Ratio (CRR) maintained with Bangladesh Bank has turned negative from a positive position. The cancellation of the Chairman and board members' appointments on Sunday night brought a sense of relief as authorities moved to manage the situation.

On May 24, after former Islami Bank Chairman Zobaidur Rahman resigned, Bangladesh Bank appointed former Deputy Governor Khurshid Alam as the bank's chairman on the same day. Earlier, following the fall of the Sheikh Hasina government on August 5, Khurshid Alam had resigned from his position as Deputy Governor amid protests at Bangladesh Bank. After August 5, 2024, the board of Islami Bank was restructured, and Obaid Ullah Masud was made chairman. Customers also protested against him, similar to Khurshid Alam. Bangladesh Bank did not heed those concerns at the time. Later, Masud was sent to jail in a corruption case.

Altaf Hossain, Acting Managing Director of Islami Bank, acknowledged that some customers are attempting to withdraw their deposits. He urged customers not to panic, stating that there is no reason to withdraw money out of fear at this moment.