Bangladesh Bank extends another Tk 2,500 crore special loan to Islami Bank

Mohammad Zahir Hossain, Executive Director of Bangladesh Bank, has taken over the responsibilities of the Board of Directors of Islami Bank Bangladesh PLC. On the same day, the central bank extended another Tk 2,500 crore in special loans to the bank. However, the bank's acting Managing Director, Altaf Hossain, said the pressure on cash withdrawals has decreased.

After assuming charge, the Bangladesh Bank executive said there is no scope to look back now. He urged depositors to continue their transactions smoothly and asked them to maintain trust in the bank.

The process of vetting to form a full-fledged Board of Directors with qualified and completely impartial individuals is underway. Senior officials, including acting Managing Director Md Altaf Hossain, were present at the briefing at Islami Bank's head office.

Regarding the formation of the board, Mohammad Zahir Hossain said the process of forming a five-member full board is underway. He stated that they want to appoint completely impartial people who can manage the bank efficiently. He expressed hope that a good and impartial board will be in place soon.

He is serving as a one-member board for a limited time to ensure no disruption to the bank's operations.

Acting Managing Director Altaf Hossain said the bank has received another Tk 2,500 crore in liquidity support from Bangladesh Bank. He noted that they had also received Tk 2,500 crore from Bangladesh Bank the previous day, and the entire amount has not yet been used. He expressed hope that those who withdrew money in panic will return, trusting the bank again.

Altaf Hossain also shared that data from a major branch of the bank shows the number of account closures has dropped by about 75 per cent, a positive sign of customers' returning confidence.

Regarding the use of the former chairman's car, he said the chairman uses a car according to bank rules. The car will be taken back as soon as the letter of removal is handed over.

When asked about bringing back former MD Omar Faruk, board-in-charge Mohammad Zahir Hossain said Faruk has already submitted his resignation, which the board has accepted. Therefore, there is no scope to reinstate him.

Earlier on Sunday, following an emergency meeting with top Islami Bank officials, Bangladesh Bank Governor Md Mostaqur Rahman cancelled the appointments of the bank's chairman and all other board directors. Bangladesh Bank Executive Director Mohammad Zahir Hossain has been appointed to oversee the board's functions under section 47(3) of the Banking Companies Act, 1991.

The central bank had previously hinted at providing liquidity support. Speaking at a post-budget press conference on June 12, Governor Mostaqur Rahman said the crisis at Islami Bank would be resolved soon and assured depositors they would have no difficulties withdrawing their money.