Islami Bank Bangladesh Limited (IBBL) once known as the most profitable and stable bank in the country's banking sector. The bank had been achieving successes in its various financial indicators (profit, investment, income, number of customers etc), particularly in the years from 2017 to 2024.

However, the bank had witnessed sudden collapse in its financial indicators during the post-2024, especially in 2024-2025 fiscal. The information has been found analysing several reports of IBBL recently.

IBBL gradually expanded its banking activities after 2017 and secured a stronger position as the largest Islamic bank of the country. During the period, the bank's investment, income and commission had increased, while branch network was expanded and deposit witnessed substantial growth. The continuity of achieving regular profit had been maintained. 

In a nutshell, the IBBL appeared as a stable and profitable bank. But, the bank had witnessed a major collapse during the reign of interim government from 2024 and 2025. In 2024, the net profit of the bank declined by 83% to Tk 108 crore only which was Tk 635 crore in the previous year. During the first half of 2025, the profit again declined by 81%. It became clear that the bank's financial condition went through a major deterioration.

Analysing a number of reports of the IBBL, it was observed that the bank's deposit was increased more than Tk 85,000 crore. Since the beginning of journey in 1983, the bank's deposits amounted to Tk 68,135 crore in 33 years up to 2016, which subsequently stood at Tk 53,457 crore. It means that the bank witnessed 125 per cent growth in its deposits.

On the other hand, the bank's deposit was also increased by Tk 28,000 crore in 2024 and 2025. However, much of the deposits was disbursed among small, medium and large traders at the directive of  a particular political party. There are also allegations that a substantial portion of the disbursed amount was spent for election campaigns.

Islami Bank made huge progress in earning remittance in 2017. In that year, the Islami Bank solely earned one-third of the country's total remittance. But, the remittance has now come down below 20 per cent due to mistrust of customers.

At the same time, Islami Bank became the first preference of both importers and exporters. As there was adequate supply of dollar, the bank also attained top position in the confidence of foreign suppliers. Even, Islami Bank was their first preference than the state-run banks. But, the inefficient management and incompetent board caused huge losses to the bank's business. Goods worth Tk 34,000 crore was imported through the bank in 2016 which amounted to Tk 57,000 crore at the end of 2023. It means that the bank had achieved almost 68 per cent growth in just seven years. Though it had  increased to Tk 64,000 crore during the first nine months of 2024, it had again declined to Tk 59,000 crore in 2025. Islami Bank witnessed export worth Tk 24,000 crore in 2016 which amounted to Tk 34,000 crore in 2023 rising by 42 per cent. But, the export had declined substantially in the subsequent two years.

According to the reports, Islami Bank turned into the highest profit-making bank in the entire banking sector from 2017 to 2023 period, registering constant growth in its profit. Since the end of 2024, the bank has been incurring losses constantly due to the inefficient board and incompetent management. It has been claimed that Islami Bank has earned profit by turning-around. In fact, it now turned into a losing concern. The bank's hidden amount of losses now stands at about Tk 3,000 crore.

The financial health of a bank is determined by its profit. Analysing the financial reports of Islami Bank, it has been found that the bank's profit had increased gradually every year and it earned the highest profit until August 2024. Except two years of COVID, the Islami Bank earned maximum profit every year.

A source at the IBBL said that the bank's profit was shown at the end of 2024 based on the profit achieved until July 2024, which is not the reflection of real financial scenario. Meanwhile, the bank had shown profit in the third quarter of 2025. Though all banks had declared profit in 2025, Islami Bank is yet to announce profit.

Asked about the reasons behind it, an executive officer of the bank's Information Technology Department said on condition of anonimity that the bank may show achieving some profit in its annual financial report, in fact, it is now in a huge amount of loss which is more than Tk 3,000 crore.

He further said that they often received directives to conceal information during the period of outgoing Bangladesh Bank governor Ahsan H Mansur. As the bank does not receive such directives anymore, it has also become unable to declare profit. The 2023 was a good year for the bank in terms of providing salaries and allowances to officials and employees. The bank could not maintain the trend on the following two years.

Experts concerned of the banking sector said the Islami Bank was known as 'a bank with strong foundation.' But, its incompetent board and inefficient management have brought the bank on the edge of the cliff in just 18 months. If such a trend continues, the Islami Bank which is regarded as the "heart of the economy" will face threat to its existence. Unless steps are taken as early as possible, the country's economy and the banking sector will face a great disaster. 

In order to keep the bank stable in future, effective policies, strict supervision and transparent management must be ensured, experts further said. 

END/ASA

Companies and organisations will be required to file tax returns on the income generated by employee welfare funds from the current fiscal year and pay a 27.5 percent tax on the earnings. 

The Income Tax Act 2023 incorporates the provision, lifting the tax exemption and amnesty on the compulsion to file returns for funds such as provident funds, gratuity funds and workers' profit participation funds maintained by the private sector.

The law, however, has exempted government-managed provident funds from taxation, raising questions.

TIM Nurul Kabir, executive director of the Foreign Investors' Chamber of Commerce & Industry, said there were many other avenues to collect tax.

"Employees benefit from provident funds after their retirement. So, the authority should not slap taxes on retirement benefit."

He said while levying the tax, the government has not treated provident funds of the private and public sectors equally.

"It is discriminatory," he said, adding that they would appeal to the tax authority for the withdrawal of the tax on income from provident funds.

Debabrata Roy Chowdhury, director for legal, regulatory and corporate affairs at Nestlé Bangladesh PLC, said the introduction of income tax on trust funds would lower the overall income from such schemes.

"This will have an adverse long-term impact on retired employees of private organisations."

Chowdhury urged the authority to address the issue in line with the spirit of the government's initiatives aimed at ensuring social security for private sector employees.

"The recent introduction of the universal pension scheme for private sector employees is a good example of that."

A senior official of the NBR, on condition of anonymity, said the income of government-managed provident funds was exempted in line with the Provident Fund Act 1925.

He said provident funds under the private sector had been historically exempted and there was no requirement to submit tax returns. As a result, it was unclear whether the funds were properly utilised.

"From now onwards, we will see proper disclosure."

The tax official said the contribution of payroll tax is about 3 percent of the total income tax although it should increase as the economy is growing.

Md Shahadat Hossain, a former president of the Institute of Chartered Accountants of Bangladesh, said income from investment in savings certificates, where people invest as a source of future earnings, is already taxed.

"From that perspective, the imposition of tax on provident and other employee welfare funds seems okay."

However, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said social protection for private sector employees was low.

"Provident and other workers' welfare-related funds provide little social protection. The imposition of tax will increase inequality. But there can't be any discrimination in taxation between private and government provident funds."

Khan, citing the latest income tax law that replaced the Income Tax Ordinance 1984, said the NBR tried to find new avenues to increase tax collection and improve the nation's revenue-gross domestic product ratio, which is one of the lowest in the world.

"We can see the desperation of the tax authority to boost collection. This ultimately reveals the inability of the NBR to catch the tax evaders and illicit money makers."