Entire Islami Bank board dissolved

The entire Board of Directors of embroiled Islami Bank Bangladesh PLC, led by its new chairman, stands dissolved in a latest regulatory move aimed at safeguarding interests of the bank, its depositors and the public.
According to a statement issued Sunday, the central bank exercised its authority under Sections 45 and 47(3) of the Bank Company Act 1991 to cancel the appointments of all directors of the country's largest Shariah-based bank.
"The decision has been taken in the interest of the bank, depositors and overall public interest," says the Bangladesh Bank (BB) statement.
Under the Act, Mohammad Zahir Hossain, an Executive Director of the central bank, has been entrusted with exercising "all powers and carrying out all responsibilities of the Board of Directors".
A senior BB official told The Financial Express (FE) that Mr. Hossain will perform all functions and responsibilities of the Board of Directors until a new board is formed.
Earlier in the day, the Bangladesh Bank injected Tk 25 billion into the cash-strapped Islami Bank in a special loan to help mitigate its severe liquidity crunch after the Eid vacation.
This sum happens to be the first tranche of Tk 100 billion the Islamic lender last week sought in liquidity assistance from the banking regulator for overcoming the liquidity starvation, Islami Bank officials have said.
The central bank disbursed the financial support to the country's largest Shariah-based bank on Sunday, according to BB spokesperson Arief Hossain Khan.
The unconventional bank plunged into a severe trouble in terms of managing liquidity following days of unrest that erupted after the Eid-ul-Azha holiday over the appointment of its new chairman Md. Khurshed Alam.
A group of people who claimed to be clients of the bank started the protest on June 01 under the banner of 'Islami Bank Sachetan Grahok Forum (Islami Bank Conscious Customers' Forum)'.
The continuous agitation triggered panic among many of the depositors who keep withdrawing funds from the beleaguered bank.
As a matter of fact, Islami Bank's liquidity position deteriorated sharply in recent days, resulting in a struggle to meet growing withdrawal demands.
In spillover effect, the bank also reportedly failed to maintain the requisite Cash Reserve Ratio (CRR) with the central bank.
Later in the day, a delegation from Islami Bank met BB governor Md. Mostaqur Rahman at the central bank headquarters briefing him on the bank's current liquidity situation.
The delegation comprised Islami Bank's managing director (current charge), two additional managing directors, and six deputy managing directors.
Seeking anonymity, an Islami Bank official says they informed the central bank governor that the trend of cash withdrawal keeps intensifying, leading to the struggle.
Despite the crisis, they managed to settle the cash-withdrawing demand. "That's why we appealed for the central bank, the lender of the last resort."
About the cash withdrawals, the Islami bank official says they have observed the net volume of cash withdrawal having reached around Tk 12 billion a day in the last couple of days.
"And the governor, during the meeting, wanted to know how the bank is using the funds provided to the bank in the meeting and they informed him in detail."

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