Bangladesh Bank on Sunday dissolved the board of directors of Islami Bank Bangladesh PLC, removed its chairman, Khurshid Alam, and appointed a senior central bank official to manage the lender amid a deepening liquidity crisis sparked by massive deposit withdrawals.
In a statement, the central bank said it had cancelled the appointments of the chairman and all directors of the bank under Sections 45 and 47(3) of the Bank Company Act, 1991, in the interest of the bank, its depositors and the public.
Bangladesh Bank executive director Mohammad Zahir Hossain has been appointed to exercise all powers and perform all responsibilities of the board under Section 47(3) of the law.
The move came after Bangladesh Bank provided the bank with a special liquidity support of Tk 2,500 crore under its lender-of-last-resort facility to help it cope with an acute cash shortage.
The bank had earlier sought Tk 10,000 crore in emergency liquidity assistance after suffering a sharp decline in deposits.
Senior bank officials said depositors had been withdrawing between Tk 1,000 crore and Tk 1,200 crore daily in recent weeks, while total withdrawals since late May reached around Tk 8,000 crore.
The liquidity pressure intensified following the appointment of former Bangladesh Bank deputy governor Khurshid Alam as chairman on 24 May, following the resignation of Professor M Zubaidur Rahman.
The appointment sparked protests by a section of customers under the banner of the Conscious Customers’ Forum, who staged demonstrations in front of the bank’s headquarters for several consecutive days.
As withdrawals accelerated, the bank reportedly struggled to meet customer demand for cash.
Depositors complained of difficulties withdrawing money from branches and ATM booths, while some alleged that cheques had been dishonoured.
