Bangladesh Bank has appointed an observer at the Islamic Bank Bangladesh PLC, the country’s largest Shariah-based private bank. The decision was taken to closely monitor the activities of the bank, ensure good governance and protect the interests of depositors.
According to a statement released by Bangladesh Bank on Wednesday, the executive director of the central bank, Md. Ashraful Alam has been appointed as the observer of Islami Bank.
During his tenure as an observer, he will participate in important policy-making activities, including meetings of the Board of Directors of the bank. Besides, he will submit regular information, opinion and monitoring report to the Bangladesh Bank about the financial and administrative activities of the bank.
Why this decision?
Recently, there was a change in the board of directors of Islami Bank and the appointment of a new chairman. Concerned about the security of the deposit, many customers withdraw a significant amount of money. This led to a lot of discussion in the banking sector about the liquidity situation and activities of the bank.
Various experts and chief executives of the banking sector believe that any crisis of Islami Bank as the country’s largest Shariah-based bank could have an impact on the entire banking system. For this reason, the central bank is taking a more active role in monitoring and controlling the situation.
Location of Bangladesh Bank
Bangladesh Bank has said it is committed to ensuring stability, transparency, accountability and good governance in the banking sector. The appointment of observers to Islami Bank is expected to strengthen the customer’s confidence in the bank and restore discipline in the activities.
The central bank governor has also taken initiative to maintain normalcy in consultation with the concerned parties on the recent situation. The appointment of observers is seen as part of this initiative.