Liquidity crunch led to merger of five Islamic banks: BB governor
The governor confirmed that the central bank of Bangladesh is actively working to reconstitute and restructure troubled Islamic banks, reporting that some positive results have already been achieved.
The Bangladesh Bank has initiated merger procedures for five Islamic banks grappling with acute liquidity stress in order to protect depositors, the central bank Governor Ahsan H Mansur said today (16 November).
"The merger process has been initiated for banks facing liquidity crisis. We have to take this step to protect the interests of depositors. We want Islamic banks to have strong balance sheets, high paid-up capital and good governance," he said while speaking at the Bangladesh Islamic Finance Summit 2025 at a city hotel in the capital.
"We expect board members [of the banks] to be responsible and representative."
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Expressing hope for the sector's trajectory, the governor said, "We want to see Islamic banking in Bangladesh grow in a systematic, well-governed, and sustainable way."
Ahsan also stressed that the future growth and stability of the country's Islamic banking sector hinges on the implementation of robust accounting, governance, and auditing practices.
The BB governor emphasised that adherence to high auditing standards is crucial for maintaining transparency and accountability in both Islamic and conventional banking institutions.
"We need good accounting, governance, and auditing for Islamic finance in Bangladesh," he stated. "The central bank is working on an Islamic banking law, and we want to follow the best global practices. Good auditing can ensure strong Islamic finance in Bangladesh."
He acknowledged that the Islamic banking sector has recently experienced a turbulent period.
However, he noted, the sector remains structurally strong and is still outperforming many others in the market.
"Globally, Islamic finance is doing well. In Bangladesh, we could have been in a much better position if not for the turbulent period. Still, we have trust in the sector, and depositors are slowly rebuilding their confidence," he said.
The governor confirmed that the central bank of Bangladesh is actively working to reconstitute and restructure troubled Islamic banks, reporting that some positive results have already been achieved.
On Islami Bank Bangladesh Limited (IBBL), the nation's largest private Islamic bank, the governor stated that while the bank is functioning well and holds the biggest client base, irregularities remain a serious concern.
He highlighted a major breach where approximately Tk50,000 crore was reportedly taken from IBBL by a single family, creating a significant strain on the bank's resources.
Despite these "disturbing findings," he noted the sustained trust of the public in IBBL.
The BB governor pointed to positive signs of recovery, noting that IBBL has overcome severe liquidity shortages and achieved the highest deposit growth in the Islamic banking sector this year.
