A major controversy has emerged in Bangladesh’s financial sector involving large-scale liquidity support from the central bank, alleged irregularities in dollar transactions, and the partial waiver of penalties imposed on a leading commercial lender. The episode has reignited concerns over governance, regulatory oversight, and the integrity of foreign exchange management.
According to internal documents and sector sources, Islami Bank Bangladesh received approximately 130 billion Bangladeshi taka in multiple tranches between December 2023 and June 2024. The support was extended through dollar purchase arrangements intended to ease liquidity pressures while ensuring foreign currency stability. However, complications arose when the corresponding US dollars were reportedly not deposited into the central bank’s nostro accounts within the stipulated timeframe, creating significant financial discrepancies.
The transactions, involving an estimated 600 million US dollars in total contractual exchange, later became the subject of regulatory scrutiny. The central bank subsequently imposed a penalty of around 3.7 billion taka on the bank, citing irregularities linked to unsettled foreign exchange obligations. In an unexpected development, half of this penalty was later waived, despite reports suggesting that no formal application had been submitted by the bank and that the decision did not pass through the central bank’s board approval process.
The central bank, Bangladesh Bank, has faced internal criticism following an audit report that characterised the incident as a serious deviation from international banking standards. The report warned that such practices could undermine foreign exchange discipline and weaken confidence in the country’s financial governance framework.
The broader ownership and governance context has also come under scrutiny, particularly the influence of S. Alam Group, which reportedly gained control of the bank in 2017. Allegations have long persisted that the group’s involvement led to substantial shifts in lending patterns and internal fund movements, contributing to structural vulnerabilities within the institution.
A senior official of Islami Bank Bangladesh stated that the current management inherited a complex treasury operation and does not possess full clarity on earlier transaction-level decisions. Nevertheless, the official acknowledged that procedural irregularities had occurred indirectly under previous management structures.
Financial analysts argue that when a central bank appears to relax enforcement mechanisms or partially reverse penalties without transparent justification, it risks eroding discipline across the entire banking sector. They caution that such precedents may weaken regulatory credibility and encourage moral hazard among financial institutions.
| Time Period | Event Description | Amount |
|---|---|---|
| Dec 2023 – Jun 2024 | Liquidity support via dollar-linked assistance | ~130 billion BDT |
| Same period | Dollar purchase contracts | ~600 million USD |
| Subsequent phase | Penalty imposed by regulator | ~3.7 billion BDT |
| Later decision | 50% penalty waived | ~1.85 billion BDT |
| Internal assessment | Estimated discrepancy valuation | ~3.1–3.7 billion BDT |
Calls for an independent and transparent investigation are growing louder, with experts insisting that accountability must be established to safeguard the credibility of Bangladesh’s banking system and restore investor confidence.