Islami Bank Bangladesh PLC (IBBL), the nation’s largest Shariah-based lender, is experiencing severe operational disruptions as a sudden surge in deposit withdrawals has triggered a significant liquidity squeeze.
Over the past week, thousands of retail depositors across key corporate branches and district outlets have reported difficulties executing cash withdrawals, accessing automated teller machines (ATMs), or securing approvals for high-value checks and pay orders.
The escalating cash crunch has prompted an official response from Bangladesh Bank.
The central bank issued a public guarantee reassuring the public that all customer deposits remain secure and that emergency liquidity support lines will be deployed to stabilize the financial institution.
However, macroeconomists and banking sector analysts point out that the cash shortages are tied to a combination of recent management restructurings, underlying loan distress, and broader institutional friction.
Operational pressures became noticeable on June 9, 2026, when several urban and rural branches began limiting cash disbursements.
By June 10, premier corporate branches—including the main hub in Motijheel—were restricting transactions, in some cases offering a maximum of Tk1 lakh in cash against single checks valued at Tk10 lakh.
By June 11, the disruption had expanded to regional hubs, including Habiganj, Rangpur, Chittagong, and Sylhet.
Branches began turning away high-value transactional checks or substituting them with corporate pay orders, several of which subsequently failed to clear.
At the same time, regional ATM networks experienced cash shortages, and real-time electronic fund transfer pathways, such as the Real-Time Gross Settlement (RTGS) system, faced localized outages.
Management changes
The immediate trigger for the liquidity pressure traces back to recent top-tier management changes enacted by the central bank.
Following the simultaneous resignations of IBBL chairman Zobaydur Rahman and managing director Omar Faruk Khan on May 24, 2026, Bangladesh Bank appointed former deputy governor Khurshid Alam to lead the board of directors.
The appointment led to immediate protests from an activist group calling itself the "Conscious Depositors Forum," which launched a seven-point demand campaign calling for the removal of the new chairman and alleging regulatory overreach.
The resulting friction triggered a swift run on the bank's deposits. Internal accounting logs reveal that depositors withdrew Tk4,240 crore within a seven-day period. The institution's total deposit base contracted from Tk184,382 crore on May 31 to Tk180,141 crore by June 7.
Acting managing director Md Altaf Hossain acknowledged that the bank is managing substantial deposit redemption requests, noting that typical post-Eid seasonal cash demands have been amplified by panic-driven retail withdrawals.
Legacy loan disputes
Finance Minister Amir Khosru Mahmud Chowdhury suggested that the sudden, coordinated run on the bank may be politically motivated.
Speaking before Parliament, the finance minister stated that the rapid capital flight and external protests following a standard administrative board change suggest an effort to destabilize the banking sector for political leverage.
Bangladesh Bank governor Md Mostakur Rahman echoed these concerns, stating that organized efforts to disrupt the institution began immediately after the new chairman was appointed.
However, financial sector historians point out that the bank’s vulnerabilities are also tied to structural weaknesses dating back to 2017, when S Alam Group acquired controlling equity in the institution.
Following that ownership transfer, the bank extended several high-volume corporate credit lines that later underperformed.
Currently, Islami Bank’s total non-performing loans (NPLs) stand at Tk95,629 crore, representing over half of its entire outstanding credit portfolio.
Analysts emphasize that years of weak loan management and large exposures to single business groups left the institution vulnerable to sudden capital shocks.
IBBL manages approximately Tk191,000 crore in assets, holding nearly half of the total deposits placed across the country's ten Islamic banking institutions.
The bank serves as the primary gateway for foreign exchange inflows, having processed over $83 billion in inbound remittances over its lifecycle.
In May 2026 alone, the bank routed $600 million in inward remittances—more than the combined totals of the other nine Shariah-compliant banks.
Industry operators estimate that nearly 8 crore citizens are directly or indirectly linked to the bank via import-export finance lines, corporate investments, retail savings, or employment payrolls.
Mosleh Uddin, managing director of Shahjalal Islami Bank, noted that prolonged liquidity issues at the sector's flagship lender could weaken public confidence in the broader Shariah-compliant financial system, potentially triggering secondary deposit withdrawals at institutions like Social Islami, First Security, Union, Global Islami, and Exim Bank.
