Islami Bank Chairman Submits Resignation Amid Disputes

The chairman of Islami Bank Bangladesh PLC, M Zubaydur Rahman, has resigned from his position. On Sunday, 24 May, he formally submitted his resignation letter to the central bank, Bangladesh Bank. The development follows a period of escalating operational and administrative disagreements between senior management and regulatory officials.

Mr Rahman was initially appointed as an independent director of the financial institution by Bangladesh Bank in July 2025. Following his appointment to the board, he subsequently assumed the responsibilities of the chairman of the board of directors. At the time of his initial appointment, the position of Governor of Bangladesh Bank was held by the prominent economist Dr Ahsan H. Mansur.

Background to Executive Leaves and Institutional Friction

According to multiple central bank officials, administrative friction emerged following a transition in government, which saw the Bangladesh Nationalist Party (BNP) assume office, and the subsequent appointment of Mostakur Rahman as the new Governor of Bangladesh Bank. Following these changes, distinct disagreements arose between central bank officials and top-tier executives of Islami Bank regarding various strategic and operational decisions concerning the institution.

Amidst these growing regulatory disputes, the chairman of Islami Bank, M Zubaydur Rahman, went abroad on a one-and-a-half-month leave of absence, under the specific condition that he would continue to attend board meetings virtually via online platforms. Concurrently, the managing director of the bank, Mohammed Omar Faruk Khan, was also placed on leave. These respective periods of leave were formally approved during an Islami Bank board of directors meeting held on 12 April.

Demonstrations at Corporate Headquarters and Resignation Submissions

On Sunday, 24 May, a meeting of the bank’s board of directors was scheduled to take place at the corporate headquarters of the institution. However, the scheduled proceedings were disrupted when a segment of the bank’s customers and certain employees initiated a demonstration outside the main entrance of the head office building.

The key developments surrounding the demonstration and subsequent executive actions include the following:

• Protester Demands: The demonstrating customers and staff members publicly urged the managing director, Mohammed Omar Faruk Khan, not to resign from his executive post. Concurrently, the protestors explicitly demanded the immediate resignation of the chairman, M Zubaydur Rahman.

• Submission of Chairman’s Resignation: Under the pressure of the developing situation, M Zubaydur Rahman transmitted his formal resignation letter directly to Bangladesh Bank.

• Managing Director’s Resignation: It was subsequently reported that the managing director, Mohammed Omar Faruk Khan, who was already on leave, also submitted his resignation letter to the board of directors.

• Cancellation of Board Meeting: Due to the unfolding disruptions and the cancellation of the scheduled board meeting, no final or definitive corporate decision could be reached regarding the processing of these resignations.

Attempts were made by journalists to establish direct communication with both M Zubaydur Rahman and Mohammed Omar Faruk Khan to secure their personal statements regarding the matter; however, neither individual could be reached for comment.

Ownership Transitions and Financial Performance Metrics

The ownership and governance structure of Islami Bank has undergone dramatic changes over the past decade. The controversial industrial conglomerate, S. Alam Group, originally seized corporate control of Islami Bank in 2017. Following the subsequent fall of the Awami League-led government, Bangladesh Bank intervened by removing the existing management and appointing independent directors to oversee the bank’s operations.

The institution’s financial stability has suffered severe erosion during this period, as evidenced by a comparison of verified data from the bank’s official annual reports:

The massive escalation in defaulted loans means that over BDT 92,000 crore of the bank’s total outstanding credit portfolio is now classified as non-performing. Furthermore, the bank’s shareholder demographics have shifted substantially; foreign institutional investment plummeted from 63 per cent to just 17.91 per cent by March 2026. Conversely, approximately 82 per cent of the total shares of Islami Bank remained tied to the interests of the S. Alam Group, leading Bangladesh Bank to formally freeze these specific equity holdings as part of its ongoing regulatory intervention.