Five Islamic banks yesterday borrowed nearly Tk 4,000 crore from Bangladesh Bank right after a liquidity support arrangement was offered by the central bank to cash-strapped Shariah-based banks. 

The fiver are Islami Bank Bangladesh, Social Islami Bank, First Security Islami Bank, Global Islami Bank and Union Bank, said a senior official of the central bank.

The boards of the five Shariah-based banks are controlled by S Alam Group, a Chattogram-based business conglomerate.

The BB on Monday announced that it would provide short-term loans for 14 days under an arrangement named "Islamic Bank Liquidity Facility".

This is the first such initiative of the central bank, coinciding with a liquidity stress being faced by a number of Shariah-based banks in Bangladesh stemming from deposit withdrawals amidst allegations of lending irregularities surfacing against the lenders.

The five banks are: Islami Bank Bangladesh, Social Islami Bank, First Security Islami Bank, Global Islami Bank, and Union Bank

The BB is now conducting a probe into Islami Bank Bangladesh disbursing Tk 7,246 crore in loans among nine companies this year by allegedly violating banking rules.

Bangladesh has 10 Shariah-based banks and, as of June 30 this year, they accounted for 26.19 per cent of the banking sector's deposits.

The Islamic banking segment's deposits stood at Tk 412,341 crore as of June this year, 12 per cent higher from that in the same month of the previous year.

The share of lending, which Islamic banks term "investment", was 28.52 per cent of the total loans and advances of the whole banking sector at the end of June this year.

The total investment of Islamic banks stood at Tk 381,829 crore, which was 16.43 per cent higher year-on-year. Disbursement of loans rose too in the April-June quarter from that in the previous quarter, according to the BB.

Apart from the 10 full-fledged Islamic banks, a number of conventional banks have opened Shariah-based banking services to attract deposits.

Nine conventional commercial banks have 45 Islamic banking branches while 13 conventional commercial banks have 480 Islamic banking windows to provide Islamic financial services in Bangladesh, said the BB.