Written by The Banking Post
The merger of five troubled Islamic banks has slipped into uncertainty, as a new legal provision opens the door for former shareholders to regain control—sparking concern among regulators and economists.
The issue stems from recent changes to the Bank Resolution Act, which now allows previous directors or shareholders of merged or merger-bound banks to reclaim ownership by paying 7.5% upfront of the funds injected by the government or central bank. The remaining 92.5% must be repaid within two years with 10% interest.
Officials warn the provision could undermine the stability of the newly formed Sammilito Islami Bank, created by merging five liquidity-strapped lenders—First Security Islami, Union, Global Islami, Social Islami and EXIM Bank.
“This has created serious uncertainty over the future of the merged entity,” said a central bank official, noting that the bank’s operations have largely stalled since the February election.
The government injected Tk 200 billion into the merged bank, which has a paid-up capital of Tk 350 billion. Of the funds, Tk 100 billion was invested in Sukuk bonds, while the rest remains largely unused. Meanwhile, about Tk 80 billion has already been disbursed to depositors.
Regulators say the amendment was not part of the original draft. A nine-member committee formed by the finance ministry later inserted the clause, with limited input from central bank atives.
“Central bank officials were not given adequate scope to present their views during the drafting,” said one involved in the process.
The change has also triggered fears that controversial business groups accused of siphoning off public funds could regain control of the banks.
Responding to such concerns, a Bangladesh Bank spokesperson said only those former directors without allegations would be eligible to return. “The goal remains to ensure transparency, accountability and discipline in the financial sector,” he said.
Economists, however, remain cautious. “The provision raises a fundamental question—what exactly will former owners reclaim? The merged entity or the original banks?” said a former World Bank economist.
With key leadership positions still unfilled and reforms hanging in the balance, the future of the merged bank now depends heavily on how the new government navigates the legal and regulatory complexities.
