The interim government and Bangladesh Bank deserve credit for taking one of the boldest decisions in recent history to rescue the country’s collapsing banking sector — a sector left in deep crisis by the reckless policies and corruption under the former fascist Awami League regime. The central bank has dissolved the boards of five financially distressed Shariah-based banks — First Security Islami Bank PLC, Global Islami Bank PLC, Union Bank PLC, EXIM Bank PLC and Social Islami Bank PLC — and initiated their merger into a single state-owned institution, to be named Shommilito Islami Bank (Combined Islami Bank).
The dissolution of the boards marks the first step toward consolidating these banks, which had been on the brink of insolvency due to years of financial mismanagement, irregularities and large-scale loan scams. Four of the banks were reportedly controlled by the S. Alam Group, while one was linked to businessman Nazrul Islam Mazumder — both names synonymous with the systemic abuses that plagued the sector.
Bangladesh Bank issued letters on November 5 suspending the boards’ activities and placing the banks under the Bank Resolution Ordinance. Administrators have been appointed to maintain day-to-day operations and ensure uninterrupted services such as remittances, LC settlements, and large transactions.
The move follows approval from the Council of Advisers on October 9 to form a new government-owned Islamic bank. According to BB data, the five banks have been suffering from acute liquidity shortages, soaring classified loans, and capital deficits for over a year. Their net asset values (NAV) have fallen into negative territory, making their shareholders’ stakes effectively worthless.
The planned Shommilito Islami Bank will have an authorised capital of Tk 40,000 crore and a paid-up capital of Tk 35,000 crore — the highest among all banks in Bangladesh. Initially state-owned, it will operate under professional management and a private-style board. The governor of Bangladesh Bank, Dr Ahsan H. Mansur, has said the merger aims to restore good governance, discipline, and depositor confidence while creating a viable and transparent Islamic banking institution.
Small depositors will be the first priority. The central bank has assured that those with Tk 2 lakh or less will get their full deposits back soon, while larger amounts will be released in phases. This assurance is critical in preventing panic withdrawals that could destabilize the process.
While merging two banks usually takes two years, merging five is a far more complex task that will unfold gradually. Success will depend on strong supervision, transparency, and consistent policy continuity by the next government.
This bold intervention was long overdue. Yet, the ultimate success of this reform will hinge on one thing above all — restoring faith among depositors, who are the true backbone of any banking system. Bangladesh Bank must ensure that their interests are protected at every step so that this historic clean-up strengthens, rather than weakens, public trust in the country’s financial future.
