The Bangladesh Bank has formed a new board of directors for Islami Bank Bangladesh, appointing five independent directors to steer the crisis-hit Shariah-based lender towards stability. 

Md Obayed Ullah Al Masud, a former managing director of Rupali Bank, has been appointed as the new chairman of Islami Bank’s board. The other independent directors include Mohammad Khurshid Wahab, a former executive officer of the Bangladesh Bank; Mohammad Abdul Jalil, a former deputy general manager of Al-Arafah Islami Bank; M Masud Rahman, a former finance professor at the University of Dhaka; and Md Abdus Salam, a chartered accountant.

During a press conference at the central bank, Bangladesh Bank Governor Ahsan H Mansur emphasized that the new board’s primary focus will be to restore stability to Islami Bank.

He clarified that the central bank’s involvement in the bank’s governance is temporary and aimed at helping it regain its footing before transitioning back to private ownership.

The decision to dissolve the previous board aims to address the mismanagement and financial instability that had plagued Islami Bank under the control of the S Alam Group. The conglomerate, which had gradually taken control of the bank, was implicated in misappropriating nearly Tk 100,000 crore over the past seven years.

Under the leadership of Ahsanul Alam, the eldest son of S Alam Group Chairman Mohammed Saiful Alam, the previous board had engaged in practices that severely undermined the bank’s financial health.

The central bank’s intervention included not only dissolving the board but also seizing all shares of Islami Bank held by the S Alam Group to offset its liabilities. Based in Chattogram, the conglomerate holds an 82 percent stake in Islami Bank, although it officially claims ownership of only 32 percent.

The S Alam Group’s influence over Islami Bank began in 2015 when it acquired shares through seven shadow companies. By 2017, the group had fully taken control, leading to appointing 7,240 employees and officials, many of whom were from Chairman Saiful Alam’s hometown of Patiya in Chattogram, violating standard regulations.

From 2017 to June 2024, the group and its affiliated companies borrowed Tk 74,900 crore from Islami Bank, accounting for nearly half of the bank’s total outstanding loans as of March 2024. These loans were often secured through non-standard procedures, highlighting the extent of S Alam Group’s influence over the bank.

Governor Mansur announced plans to form a banking commission to inspect other weak banks and identify their issues. The central bank also intends to recover funds that have been laundered through both local and international channels.