The administrators of five merged Islamic banks have sought a written and explicit directive from the Bangladesh Bank (BB) regarding the future of the merger process, following renewed instability among depositors.
The unrest stems from a perceived ambiguity in Section 18(a) of the recently enacted Bank Resolution Act, 2026.
The demand came during a meeting with the BB Governor Md Mostaqur Rahman on Sunday, when the administrators highlighted that many depositors are rushing to withdraw their funds – some even demanding only their principal amount without profits – fearing that previous owners might regain control of the banks.
Last year, Exim Bank, Social Islami Bank, First Security Islami Bank, Union Bank, and Global Islami Bank were merged to form the Combined Islamic Bank. The process was overseen by central bank-appointed administrators.
However, Section 18(a) of the new law stipulates that previous owners can regain control by repaying just 7.5 percent of the total financial assistance provided by the Bangladesh Bank and the government.
The administrators argue this clause has triggered a fresh wave of uncertainty, stalling new deposits and severely hampering loan recovery efforts.
Financial Crisis and Default Burden
According to the BB data, the Combined Islamic Bank is currently grappling with a massive financial burden, with total outstanding loans standing at Tk 1.96 lakh crore.
A staggering 84 percent of the total loan portfolio is classified as defaulted while the bank faces a capital deficit of Tk 1.50 lakh crore.
To keep the institution afloat, the central bank has provided Tk 47,084 crore in liquidity support, while the government injected Tk 20,000 crore in capital. An additional Tk 12,000 crore has been allocated from the Deposit Insurance Fund.
Operational Challenges
The administrators noted that while a recent decision to provide 4 percent profit on deposits brought temporary relief, the legislative change has reversed those gains.
They emphasised that without a clear, written message from the regulator confirming the permanency of the merger and the status of previous owners, restoring public trust in these Shariah-based institutions remains nearly impossible.