Steps to address Islami Bank crisis within days, including emergency liquidity support: Governor
'When I took over, I found that nearly one-third of the money in the banking sector had been stolen,' he says.
Bangladesh Bank Governor Mostaqur Rahman has assured depositors of Islami Bank Bangladesh PLC that the central bank will take several measures within the next few days to address the bank's ongoing challenges, including providing emergency liquidity support.
"Depositors will not face any inconvenience. They will be able to withdraw their money at any time," he said while responding to questions on the banking sector from journalists while speaking at the post-budget press conference for FY2026-27 at the Osmani Memorial Auditorium in Dhaka today (12 June).
He added that Bangladesh Bank has a number of tools at its disposal to manage the situation and that some of these measures would be implemented in the coming days.
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"For Islami Bank, we will provide whatever emergency liquidity support is required," Mostaqur said.
Allegations of interference
The governor rejected allegations of unlawful interference in the management of Islami Bank.
"On the afternoon before Eid, the then chairman resigned from his position. Since a systemically important bank cannot operate with fewer than five board members, we had to appoint a replacement immediately," he said.
He added that the board in place when the current administration took office had been formed by the interim government.
One member was replaced on 16 March following allegations of irregularities, but beyond that the central bank had not intervened in the bank's affairs, Mostaqur said.
"We have not interfered in matters such as bonuses, transfers or promotions," the governor added.
Concerns over financial position
The governor acknowledged concerns about the bank's financial condition, noting that its advance-deposit ratio (ADR) had risen significantly.
"In July 2024, Islami Bank's ADR stood at 93%. It has now increased to between 97% and 98%, while our regulatory limit is 92%. We have instructed the management to bring it down," he said.
'Banking sector inherited in difficult condition'
The governor said he assumed office at a time when the banking sector was facing severe challenges.
"When I took over, I found that nearly one-third of the money in the banking sector had been stolen. We began our journey with non-performing loans accounting for around 35% to 36%," he said.
The governor said, "Our priority from the outset was first to stabilise the sector and then recapitalise it."
He added that restoring confidence in a banking system that had suffered such losses would require patience.
Update on Sammilito Islami Bank
Addressing concerns surrounding Sammilito Islami Bank, the governor dismissed social media claims that the bank had ceased operations after the current government took office.
He said the bank's chairman had resigned and the nominated managing director had declined to assume the position.
According to him, Bangladesh Bank subsequently launched a recruitment process, collecting reports from various agencies and conducting interviews in May before appointing a new managing director.
The appointment process was completed at the end of May after receiving the necessary approvals, he said.
According to the governor, the bank's board is now functioning normally, and its newly appointed chairman held his first board meeting earlier this week.
He identified the lack of integration among the core banking systems of five Islamic banks as a major challenge currently being addressed.
Troubled financial institutions
The governor also offered positive news regarding several non-bank financial institutions (NBFIs).
He said, "Within the next one or two weeks, we will begin resolving the problems affecting a number of NBFIs."
"Some depositors have been unable to access their money for the past 12 years. As a result of our initiatives, they will be able to recover their funds," he added.
