Amid the commotion of hundreds of passengers trying to disembark, a stampede ensued which caused the ferry to tip and take in water.
"It tilted and part of it sank due to crowd pressure as it arrived near the Nazirpur river station," Hossain said.
Police, fire brigade and volunteers rushed to Nazirpura to rescue the people still under water.
"Until we can lift the sunken side, we can't know how many were trapped inside"
Abdullah al-Islam, a local politician, said authorities were sending a salvage vessel to bring the boat to shore.
"Until we can lift the sunken side, we can't know how many were trapped inside," he said.
An official said divers had rescued more than 100 people from the submerged part of the vessel, managing to prise open lower cabins.
Some of those rescued were in critical condition in hospital.
MV Coco-4 is a three-storey ferry and one of Bangladesh's largest inland vessels.
The passengers were going to their village homes to celebrate the Muslim festival of Eid al-Adha.
Nicolas Haque, Al Jazeera's correspondent in Bangladesh, quoting police officers who were on board, said the boat was heavily overcrowded when it sank.
"Ferry accidents happen a lot in Bangladesh and that's partly to do with the fact that ferries are old and burdened with so many passengers that board the ship," he said.
"But [they happen] also because the currents are much stronger now because the river intensity has increased."
A witness said: "People were trying desperately to reach home before the
Eid prayers on Saturday morning. They even found themselves room in the ferry's luggage holds."
Poor safety standards also add to the high frequency of boat and ferry accidents in the country, which is criss-crossed by a network of 230 rivers.
Experts say most of the 2,000 large- and medium-sized ferries which ply the rivers are built in local dockyards without proper safety checks.