Islami Bank’s Default Loans Reach Tk 94,000 Crore

A large-scale embezzlement of depositors’ funds under the guise of loans at the listed Islami Bank has come to light. According to audit report findings, a significant portion of loans disbursed through a syndicate linked to the S Alam Group has now turned into classified loans. As a result, loan recovery has become uncertain, placing the bank’s depositors’ funds at severe risk.

The information was revealed in the financial audit report of Islami Bank Bangladesh for 2025.

According to the audit report, the total investment (loans) of Islami Bank stood at Tk 186,097.73 crore as of December 31, 2025. Of this, defaulted loans amounted to Tk 94,322.59 crore, more than half of the total investment. Against this massive volume of non-performing loans, the bank should have maintained provisions of Tk 88,898.59 crore. However, it has actually set aside only Tk 5,887.56 crore. As a result, the provision shortfall in this sector alone stands at Tk 83,011.03 crore.

Meanwhile, according to Bangladesh Bank data, the total required provision against Islami Bank’s investments and other assets stood at Tk 92,537.56 crore as of December 31, 2025. Against this, the bank has made provisions of only Tk 7,922.41 crore. This leaves a total provision shortfall of Tk 84,615.15 crore against investments and other assets.

The audit report notes that by failing to recognize this massive provision gap, the bank’s financial statements have overstated assets, net profit, and equity, while simultaneously understating liabilities.

Although Bangladesh Bank later allowed the bank to build provisions due to insufficient profits, stakeholders believe such relaxation is not consistent with international accounting standards. They argue that the bank will eventually have to create this massive provision in full, and its actual impact has not been reflected in the current financial statements. As a result, investors are being misled about the bank’s true financial condition, which amounts to financial irregularity and deception of investors.

Banking sector insiders say that a weak culture of using short-term deposits for long-term lending, along with politically influenced takeovers of banks and lending to non-performing entities, has pushed Islamic Bank and several other banks into deep crisis. Ordinary depositors are bearing the consequences and are now living in extreme uncertainty over the recovery of their savings.