Islami Bank Bangladesh PLC has taken an initiative to increase its authorised capital fivefold to Tk10,000 crore from the existing Tk2,000 crore as part of efforts to address its capital shortfall.
The Bangladesh Bank has given its approval to the proposal, which was approved at a meeting of the bank’s board of directors on November 4.
The bank currently has paid-up capital of Tk1,609 crore. However, the proposed capital increase will require further approval from the Registrar of Joint Stock Companies and Firms (RJSC), the Bangladesh Securities and Exchange Commission (BSEC) and the shareholders.
Islami Bank Additional Managing Director Kamal Uddin Jasim said the bank had developed a substantial capital shortfall due to rising non-performing loans. The injection of fresh capital would help reduce the deficit, he added.
A senior Bangladesh Bank official said that following the proposed increase in authorised capital to Tk10,000 crore, the bank would need to maintain subscribed capital of at least Tk5,000 crore and paid-up capital of Tk2,500 crore.
However, raising funds through an initial public offering (IPO) or private placement could be difficult under the current market conditions. Government capital support or the issuance of rights shares could be considered as alternative options, the official said.
According to a bank official, around 82 percent of the bank’s existing paid-up shares are reportedly held directly or indirectly by the S Alam Group. These shares have been frozen under a court order. The issuance of new shares could reduce the group’s ownership percentage in the bank.
Meanwhile, Islami Bank incurred a net loss of Tk3,303 crore in the first nine months of 2026. As of September, Tk1.06 lakh crore of its total loans had turned non-performing, while its provisioning shortfall stood at Tk85,886 crore.
The S Alam Group allegedly withdrew around Tk88,000 crore from the bank between 2017 and August 2024 through its own entities and shadow companies. A significant portion of these loans subsequently turned into defaulted loans. The Bangladesh Bank is currently overseeing the bank’s operations.
