Islami Bank faces withdrawal pressure: Tk3,500cr taken out in 5 days

Customers have withdrawn more than Tk3,500 crore from Islami Bank within five working days following the appointment of former Bangladesh Bank deputy governor Md Khurshid Alam as chairman, amid growing uncertainty among depositors.

Senior bank officials said the withdrawals accelerated after Khurshid Alam's appointment. 

According to one official, customers withdrew Tk2,570 crore during the first four working days (1-4 June) after the appointment. Preliminary data from branches across the country suggest withdrawals yesterday alone could reach Tk1,000 crore, he said. 

On 24 May, Khurshid was appointed as the bank's chairman after he lost his post as deputy governor following the July uprising 2024. He was scheduled to assume office on 1 June.

However, protests under the banner of the "Islami Bank Sacheton Grahok Forum" gathered outside the bank's head office, demanding his removal. A board meeting planned for that day could not proceed as Khurshid was unable to attend his first working day amid the demonstrations. The central bank later directed that the meeting be held online.

Khurshid's appointment came on the same day that former chairman Zubaidur Rahman stepped down amid protests by bank officials.

Islami Bank Additional Managing Director and acting Managing Director Altaf Hossain acknowledged that some customers had been attempting to withdraw their deposits. "I urge customers not to panic. There is no reason to withdraw money out of fear at this moment."

He added, "Any loan approval now goes through a rigorous scrutiny process. I am hopeful that Bangladesh Bank will step in to address the concerns among customers and help resolve the current situation."

Mohammad Shahriar Siddiqui, Assistant Spokesperson of Bangladesh Bank, said, "We are keeping Islami Bank under observation. We are tracking whether customers are withdrawing cash to hold it or shifting it to other banks," he said.

He added that the bank is not in a position where it cannot meet withdrawal demands. "If Islami Bank is unable to meet liquidity needs, the central bank will provide support," he said.

"Even after 5 August 2024, the bank faced a crisis and Bangladesh Bank provided liquidity support. Our relevant department is closely observing the movement," he added.

Bank officials said following the restructuring of Islami Bank's board after 5 August 2024, the bank's total deposits rose to Tk1.83 lakh crore in 2025. Deposits increased by more than Tk22,000 crore in a year. During that period, fresh deposits exceeded withdrawals, resulting in overall growth in the bank's deposit base.

However, within just five days after the appointment of new chairman Khurshid Alam, the bank has reportedly lost around Tk3,500 crore in deposits.

Meanwhile, a Bangladesh Bank official said the central bank had summoned acting Managing Director Altaf Hossain for discussions on the bank's current situation. He arrived at Bangladesh Bank around 5pm yesterday and was expected to meet the governor to discuss the unfolding crisis.

Protests continue

Employees and customers opposing Khurshid's appointment announced fresh programmes during a rally and protest procession outside Islami Bank Tower in Motijheel yesterday.

Nur Nabi Manik, president of the protesting platform, demanded that Khurshid Alam resign within 24 hours. He announced a nationwide two-hour "pen-down" strike and sit-in programme from 10am to noon today.

He also called for the sale of the 82% stake in Islami Bank allegedly acquired through fraudulent means by the S Alam Group to offset outstanding loans.

Manik warned that protesters would resist any attempt by Khurshid to enter the bank and said no loan defaulter or accused director should be allowed to remain on the bank's board.

Search for a way out

An additional managing director of the bank, speaking on condition of anonymity, said branch managers across the country had repeatedly informed Khurshid about long queues of customers seeking to withdraw funds, but had received no guidance on how to address the situation.

The Banking Regulation and Policy Department (BRPD) of Bangladesh Bank is responsible for approving appointments of directors and managing directors. The department also approved Khurshid's appointment.

Asked about the developments, BRPD Director Md Alauddin said: "Our department's role is limited to approving appointments. Monitoring deposits and withdrawals falls under another division. However, we have also received reports through various channels that funds are being withdrawn from Islami Bank. We will inform the higher authorities."

Repeated attempts to contact Bangladesh Bank's spokesperson and assistant spokesperson for comment were unsuccessful.

The latest developments come amid a broader trend of rising cash holdings outside the banking system as confidence in the sector remains under pressure.

According to Bangladesh Bank data, currency outside banks stood at Tk275,000 crore in December 2023. By the end of March this year, the amount had increased by nearly Tk28,000 crore to Tk303,000 crore.