Islami Bank Faces Tk 70,000 Crore Provision Deficit, Leaked Audit Raises Profitability Concerns.
Audit reveals inflated profits, soaring non-performing loans, and liquidity shortfalls at Bangladesh’s largest Sharia-compliant bank.
A leaked audit report has revealed that Islami Bank Bangladesh PLC is facing severe financial vulnerabilities, with a provision shortfall of nearly Tk 70,000 crore at the end of the 2024 fiscal year. The audit, conducted by Mahfel Haque & Co. and A. Wahab & Co., raises serious questions about the bank’s reported profit of Tk 108 crore, suggesting that it was significantly overstated due to under-provisioning against defaulted loans and risky investments.
Massive Provision Deficit
According to the audit findings, Islami Bank was obligated to maintain Tk 76,715 crore in provisions to cover non-performing loans (NPLs) and exposures to non-banking financial institutions. However, the bank only provisioned Tk 6,945 crore, leaving a staggering deficit of Tk 69,770 crore.
This discrepancy casts doubt on the bank’s financial health and its ability to absorb potential future losses, especially as defaulted loans continue to grow at an alarming rate.
Profit Discrepancy and Questionable Asset Quality
Despite the massive provision gap, Islami Bank reported a net profit of Tk 108 crore in 2024 — a sharp decline from Tk 635 crore the previous year. Auditors noted that the bank inflated its profit, asset, and equity figures by failing to make the required provisions, which directly violates standard accounting practices and regulatory norms.
The audit also noted a 849% increase in non-performing loans, which reached Tk 65,715 crore, while provisions against those toxic assets grew only 68%, raising further concerns about risk management and financial transparency.
Liquidity Shortfall and Regulatory Breaches
The audit report highlights a liquidity crisis, with Islami Bank’s cash reserve ratio (CRR) and statutory liquidity ratio (SLR) consistently falling below Bangladesh Bank’s regulatory thresholds during the fiscal year.
Auditors warned that the bank’s financial stability now depends heavily on regulatory support and intervention. Despite this, the bank claims to have repaid an overdraft facility of Tk 2,308 crore from the central bank ahead of schedule, as well as Tk 1,700 crore in borrowings from other commercial banks.
Deposit Growth and Confidence Claims
In a statement, Islami Bank emphasized that customer confidence remains strong. The bank reported a Tk 6,162 crore increase in deposits in 2024, representing 4% annual growth. During the first eight months of 2025, deposits reportedly grew by Tk 18,200 crore.
With over 25 million customers, the bank claimed that 90% of its deposits are sourced from retail clients, with only 2% from corporate accounts — a sign, it says, of strong grassroots trust.
Recovery Efforts and Restructuring Plan
Following a liquidity scare and public backlash in mid-2024, Islami Bank launched a three-phase restructuring plan. In the first phase, the bank claims to have stabilized its liquidity and begun implementing recommendations from international auditors.
The bank also reports that it has recovered defaulted loans totaling Tk 20,000 crore, although independent verification of this claim was not provided in the leaked report.
