Fresh tension erupts at Islami Bank over leadership and control

A fresh wave of tension has gripped Islami Bank as disputes over ownership control and leadership escalated into street protests in Dhaka's Motijheel area, raising fresh concerns over depositor confidence in the country's largest private lender.

Hundreds of demonstrators under the banner of the "Islami Bank Sacheton Grahok Forum" gathered outside the bank's head office yesterday, demanding the removal of newly appointed chairman Md Khurshid Alam.

During the protest, police used water cannons, sound grenades, tear gas, and baton charges to disperse demonstrators. Chases and counter-chases were also reported in the area.

Jamaat-e-Islami Secretary General Mia Golam Porwar strongly condemned the police action, while a separate statement issued under the banner of the Jatiyotabadi Bankers Association, Bangladesh (JBAB) also denounced attempts to "seize control" of Islami Bank.

Protesters alleged that Khurshid, who was scheduled to join the bank yesterday, is linked to the controversial S Alam Group and claimed his appointment could expose the lender to renewed financial irregularities.

They also demanded the reinstatement of former managing director Omar Faruk Khan, who was sent on forced leave by the board on 12 April. Although he did not submit a resignation, he has been unable to return amid opposition from another group of stakeholders.

The demonstrators warned of an indefinite movement if their demands were not met. They also claimed that at least 25 customers were injured during the clashes, five of whom were taken to Dhaka Medical College Hospital.

Hussein Muhammad Farabi, assistant commissioner of police of the Dhaka Metropolitan Police's Motijheel Zone, told TBS that several hundred customers had gathered in front of Islami Bank Tower since dawn, demanding that the newly appointed chairman be barred from joining.

"They were asked to leave, but they did not comply. Around 9:15am, we used water cannons, sound grenades and tear gas shells to disperse them," he said.

Struggle of bank leadership

Earlier on 24 May, M Zubaidur Rahman stepped down as chairman of Islami Bank, reportedly under pressure from Jamaat-e-Islami. Zubaidur, who was appointed by Bangladesh Bank on 23 July last year during the tenure of former governor Ahsan H Mansur, submitted his resignation to newly appointed governor Md Mostaqur Rahman in the afternoon of 24 July.

The central bank moved quickly to appoint Khurshid Alam as the new chairman the same day, even after office hours, on the last working day before the Eid vacation.

Khurshid, who previously served as deputy governor during the ousted Sheikh Hasina government, was forced to leave the central bank following protests by over a hundred officials of Bangladesh Bank a day after the political changeover on 5 August 2024.

Jamaat expresses full support for protesters

Jamaat Secretary General Mia Golam Porwar in a statement, said, "We strongly condemn and protest the police firing on ordinary customers protesting in front of the head office of Islami Bank to protect the interests of the bank and demand the resignation of the newly appointed controversial chairman."

He added, "We also express our full support for the customers' justified demands." Porwar further alleged that the newly appointed chairman was an associate of "Awami fascism", warning that his continuation in the post could expose the bank to renewed irregularities.

"Customers believe that if he remains in this important position, the bank may once again face extensive looting, and the deposits of ordinary people will become insecure," he said.

JBAB condemns alleged bid to seize control

A statement issued under the banner of the Jatiyotabadi Bankers Association, Bangladesh (JBAB) has condemned alleged attempts to seize control of the bank and create instability in the sector through coordinated activity involving bots and individuals posing as customers.

The statement said all bankers must remain vocal against what it called a "malicious attempt" to take over Islami Bank under the guise of a customer forum. It also urged the government to take strict action against those allegedly involved in destabilising the banking sector and conspiring to gain control of the lender.

It further condemned attacks, intimidation and physical assaults allegedly linked to the unrest, and demanded the arrest of those responsible. 

Islami Bank's troubled journey

Islami Bank has long been linked to individuals and trusts associated with Jamaat since its inception in 1983. However, in 2017, control of the bank was effectively taken over by the S Alam Group, owned by Mohammed Saiful Alam, also known as S Alam, who was considered close to the then government led by Sheikh Hasina.

Following the political changeover, Bangladesh Bank stepped in and assumed control of the institution by seizing 82% of shares held by the S Alam Group, subsequently reconstituting the board with independent directors. However, the ownership dispute remains unresolved, as the legality of the seized shares is still pending before the courts.

Earlier, under the leadership of former governor Ahsan H Mansur, Bangladesh Bank planned to divest the S Alam-held shares and bring in new strategic investors. The process, however, has since stalled after the appointment of new governor Md Mostaqur Rahman. 

Once the country's most profitable lender just two years ago, Islami Bank reported a loss of Tk288 crore in the January-March quarter of 2026. Its classified loans surged to 42.36% at the end of 2024, up from 4.32% in 2023, according to its annual report. The bank also faced a provision shortfall exceeding Tk 65,000 crore by the end of 2024.

The lender has failed to declare dividends for two consecutive years, resulting in its first-ever downgrade to the 'Z' category in 2024.

BB instructs Islami bank to hold board meeting online

A board meeting, scheduled for yesterday afternoon could not take place after newly appointed Chairman Khurshid Alam failed to attend his first working day amid protests.

In the prevailing situation, the central bank instructed that the board meeting be held online. The session eventually continued until 9pm.

Arif Hossain Khan, executive director and spokesperson for the Bangladesh Bank, said the central bank approved a virtual board meeting amid concerns over potential unrest driven by information circulating on social media. 

He added that while law enforcement agencies handle external security, Bangladesh Bank is monitoring internal security closely.

He further said it is inappropriate to associate any bank with a specific political party. 

According to him, attempts to build or project a political identity for a bank could pose a serious threat to its long-term stability and sustainability. 

In light of recent protests and developments, the central bank is also reviewing whether any banks are becoming linked to particular political organisations, added Arif Hossain.

Protesters enter meeting room

During their protest, members of the Islami Bank Sacheton Grahok Forum entered the room during a meeting between law enforcement personnel and Islami Bank's acting Managing Director Altaf Hossain.

The meeting was reportedly taking place at the bank's head office when forum members entered the room, alleging that pressure was being exerted to compel the acting MD to hold a virtual board meeting under influence of law enforcement officials. 

They also claimed that police in uniform and several plainclothes personnel were present in the room prior to their arrival, though those officers later left before journalists and forum members entered.

Around 3:30pm, members of the forum gathered outside Altaf Hossain's office and alleged that the meeting was being conducted under pressure from law enforcement agencies.

A senior Islami Bank official told TBS that pressure had been applied to hold a board meeting, and an IT team was reportedly sent to the chairman's residence to facilitate a virtual board session.