Written by The Banking Post
Bangladesh Bank has ruled out any further bank mergers, making it clear that weak lenders outside the ongoing consolidation process must return depositors’ money on their own.
The central bank’s spokesperson Arief Hossain Khan told on Wednesday evening that the responsibility for refunding deposits rests entirely with the banks that collected the funds from customers. “The government has taken responsibility for depositors of five banks. It will not assume responsibility for any other bank,” he said.
Banks that are unable to repay depositors because funds are stuck with default borrowers have been advised to take all necessary measures, including filing lawsuits, to recover the money, the Bangladesh Bank executive director said.
According to central bank data, as of the end of September this year at least 17 banks had non-performing loan ratios exceeding 50 percent. Most of these banks are struggling to conduct regular transactions, while some have failed to return depositors’ funds. In several cases, banks have been unable to pay even Tk50,000 against deposits of Tk50 lakh, forcing customers to withdraw only Tk5,000 to Tk10,000 at a time.
Against this backdrop, the future of weak banks outside the merger framework has recently been discussed at the central bank. Referring to those deliberations, the spokesperson said that, in line with the plan, no new banks will be acquired or merged.
Currently, First Security Islami Bank, Global Islami Bank, Union Bank, EXIM Bank and Social Islami Bank are undergoing the merger process. As part of this initiative, these institutions are being operated under the Bank Resolution Ordinance. Bangladesh Bank has dissolved their boards, removed managing directors and placed the banks under administrator-led management.
