In a major move to stabilize the economy of the banking sector, Bangladesh Bank has approved the merger of five crisis-stricken Islamic banks into a single entity named 'Combined Islamic Bank PLC'.

The central bank confirmed on Thursday that the withdrawal process for depositors will begin next Monday or Tuesday. This decision follows a severe liquidity crisis triggered by massive loan scams and irregularities carried out by influential groups during the previous Awami League administration.

The five banks being merged are-Exim Bank, Social Islami Bank, First Security Islami Bank, Global Islami Bank and Union Bank.

According to a senior Bangladesh Bank official, the complexities regarding deposit returns have been resolved. The funds will be provided under the deposit insurance scheme, and customers can withdraw money from their respective bank branches.

Accounts up to Tk200,000, can withdraw the full amount in one go once the scheme starts. Accounts above Tk200,000, can withdraw maximum Tk100,000, every three months for the first two years.

Seniors (60+) and critical patients however can be exempted from any limit on their withdrawals, as needed for medical or age-related reasons.

If a customer has multiple accounts in one bank, they can only withdraw from one. However, if they have accounts in different merging banks, they can withdraw the designated amount from each bank.

Central bank data reveals that these five banks currently hold approximately Tk 142,000 crore in deposits from 75 lakh customers. In contrast, their total loans stand at Tk 193,000 crore, the majority of which have become defaulted.

To reduce costs, the banks have already slashed employee salaries and allowances by 20 percent. The existing network of 760 branches and nearly 1,000 ATMs will be consolidated, with overlapping branches in the same areas being merged.