Written by The Banking Post
The interim government has formed an eight-member working committee to execute the planned merger of five troubled Shariah-based private banks into a single state-owned Islamic lender.
An order issued Monday by the Financial Institutions Division (FID) said the committee, led by Bangladesh Bank Deputy Governor Md Kabir Ahmed, will prepare a detailed work plan for the consolidation. Senior officials from the finance ministry and the central bank are also on the panel.
The banks being merged are First Security Islami Bank, Global Islami Bank, Union Bank, Exim Bank and Social Islami Bank. The new institution, created under the Bank Resolution Ordinance 2025, will require Tk 35,200 crore in capital—Tk 20,200 crore to be injected by the government and Tk 15,000 crore raised through institutional funds and converted deposits.
Officials said the move is aimed at avoiding costly liquidation and restoring trust in Islamic banking, which has been shaken by allegations of massive fund siphoning by politically connected conglomerates.
Forensic audits commissioned by the government revealed staggering non-performing loan (NPL) levels—96.37% at First Security Islami, 97.8% at Union, 95% at Global Islami, 62.3% at Social Islami and 48.2% at Exim Bank.
Bangladesh Bank earlier dissolved the lenders’ boards and appointed new ones after the regime change in August 2024. Three banks—First Security, Union and Global Islami—have accepted the merger plan, while Exim and Social Islami opposed it.
Regulators say consolidation is now the only viable solution after years of weak oversight.
