United News of Bangladesh

Bangladesh’s banking sector is experiencing a profound transformation, with a notable surge in small and lower-medium deposits coinciding with a sharp withdrawal of funds by the nation’s wealthiest depositors following the political changeover in August 2024. According to Bangladesh Bank (BB) data, total deposits rose to Tk19.14 lakh crore by the end of September 2025, up from Tk17.41 lakh crore a year earlier, marking a year-on-year growth of 9.98 percent—the second-highest in 18 months. August had recorded a slightly higher increase of 10.02 percent, a 17-month peak. Experts suggest that this paradoxical growth—rising overall deposits despite the exodus of ultra-rich clients—reflects renewed public confidence in the formal banking system amid ongoing economic uncertainty. Abdul Mannan, former executive director of Bangladesh Bank, told UNB, “Fixed-income groups and private sector pensioners are returning to the banking sector because banks are offering 10 to 11 percent returns on different term deposits. These depositors had previously left due to the single-digit interest rate policy of the former regime.” Read more: BB orders strict loan data updates to bar defaulters from election race Wealthy Depositors Withdraw Capital While aggregate deposits are climbing, accounts holding Tk50 crore or more have plunged from 72 to 26 within a year. Similarly, accounts in the Tk25-50 crore range have been halved to 78. Bangladesh Bank officials attribute this outflow to political and structural changes. “Large asset holders always make decisions based on the political environment. Therefore, it is natural for their funds to rapidly move elsewhere when the environment changes,” a senior official said. The main drivers include: ·         Political Vulnerability: Individuals associated with the previous government are reportedly seeking safe havens amid potential investigations. ·         Bank Mergers and Uncertainty: The new government’s consolidation of weaker banks has prompted large withdrawals. ·         Asset Diversification: Funds are moving to less-regulated avenues such as real estate, gold and informal transfers abroad (Hundi). ‘Deposit Protection Ordinance’ issues to boost confidence in banking sector Syed Mahbubur Rahman, MD and CEO of Mutual Trust Bank, observed that the ultra-rich tend to monitor political stability closely and return to investment once confidence is restored. Small Depositors Form the New Pillar In contrast, small and middle-class depositors are becoming the backbone of the sector. BB statistics reveal significant growth in smaller accounts: ·         Accounts holding Tk0-2 lakh rose to 14.76 crore from 13.28 crore in June 2024. ·         Accounts holding Tk2-25 lakh increased to 1.02 crore from 88.77 lakh. ·         Accounts in the Tk25-50 lakh bracket rose to 4.09 lakh from 3.64 lakh, while Tk50 lakh-1 crore accounts increased to 1.72 lakh from 1.59 lakh. ·         Overall, the number of millionaires with Tk1 crore or more grew by 8,552 over the past year, although ultra-rich accounts have declined, suggesting a shift towards medium-level wealth accumulation. Read more: Bangladesh shifts fiscal gears as bank debt falls Government Measures Reinforce Confidence To strengthen depositor confidence, the government introduced the Deposit Protection Ordinance, 2025, guaranteeing refunds up to Tk2 lakh in the event of bank liquidation or bankruptcy. The Deposit Insurance Department issued directives detailing the framework on November 23, emphasising swift disbursement and enhanced risk management for small depositors. “This has restored trust among small depositors, encouraging them to return to the banking system following the political transition,” Rahman said. The developments indicate a structural shift in Bangladesh’s banking sector, as smaller depositors increasingly form the foundation of growth while the ultra-wealthy recalibrate their exposure in response to political and economic changes. Read more: NPLs soar to 35.73% of disbursed loans as irregularities under AL get exposed

Officers ‘deprived of promotion’ at state-owned Sonali, Agrani, Janata and Rupali banks formed a human chain in front of the Bangladesh Bank on Sunday (November 30), demanding an end to what they described as longstanding discrimination in career advancement. The aggrieved officials alleged that widespread supernumerary promotions were granted after the recent political changeover without adherence to rules, leaving many qualified officers sidelined. Speakers at the demonstration accused the Financial Institutions Division (FID) of unwarranted interference in the promotion process. They called for merit-based promotions under regular vacancies and updated organograms, alongside proper evaluation of those who were denied advancement during the previous Awami League government for political reasons. Read more: Ex-Padma Bank chairman Nafis Sarafat, 3 others sued for embezzling over Tk 1600cr   According to the protesters, the current interim government has already addressed discrimination in the civil service by granting officials — both active and retired — promotions of one to three steps since 2024. The officials alleged that despite thousands of supernumerary promotions in state-owned banks last year, the long-standing grievances of genuinely deprived staff have yet to be addressed. They further claimed that instead of addressing the issue in 2025, the FID introduced a new ‘post assimilation’ directive that has deprived many officers once again, resulting in no progress in the promotion process this year. The officials claimed a vested group within the ministry was pushing discriminatory policies to create instability in the banking sector and portray the previous government as the better alternative. Read more: Bangladesh Bank orders pay cuts for Sammilito Islami Bank’s employees To restore discipline in the sector, the protesters placed a three-point demand, including an end to what they termed illegal interference by the FID in areas such as promotions, incentives, loan approval, organogram updates and post assimilation—matters they said legally fall under the authority of bank boards as per the Vendor’s Agreement and relevant Articles of Association. They also sought cancellation of all related directives issued by the ministry. They urged the authorities to issue circulars inviting applications from officers who faced discrimination between 2009 and 4 August 2024, and to ensure at least one promotion for them by December this year. The protesters also called for a transparent and modern promotion policy modelled on the Bangladesh Bank system. Read more: Merged bank to be launched this week: BB Governor Mansur

Default loans in Bangladesh's banking sector have surged significantly, reaching Tk 6,44,515 crore at the end of September this year. This alarming figure represents 35.73 percent of the total disbursed loans. The increase is massive compared to the end of December 2024, when the volume of non-performing loans (NPLs) stood at Tk3,35,765 crore. This indicates that default loans have ballooned by Tk 2,98,750 crore over the nine-month period, although this is mainly due to the exposure of funds siphoned off under the previous government that are only now beginning to be included under the NPL category, as well as the adoption of stricter international standards in classifying loans. The development was confirmed by Shahriar Siddiqui, Director and Spokesperson for the Bangladesh Bank, to the media on Wednesday (November 26). Read more: Union Bank suffered Tk 26,000cr net loss in 2024 amid S. Alam Group scam Bangladesh Bank officials attribute the substantial increase to multiple factors: Exposure of Unaccounted Funds: Funds reportedly siphoned off from banks under various names during the tenure of the Awami League government are now beginning to be classified as non-performing. Adoption of International Standards: The country's adoption of international standards for classifying loan defaults is contributing to the rise in NPLs. Failure of Rescheduled Loans: Many loans that were previously restructured or rescheduled are failing to be repaid. Central Bank Intervention: The central bank has listed several irregular loans as defaults, further pushing up the NPL volume. According to data from the central bank, the total outstanding disbursed loan amount stood at Tk 18,03,840 crore at the end of September this year. Of this amount, the defaulted portion, as mentioned, is Tk 6,44,515 crore, which is 35.73 percent. Comparing year-over-year figures, default loans had reached Tk 2,84,977 crore at the end of September last year. This means that the total volume of non-performing loans has increased by a staggering Tk 3,59,718 crore over the past twelve months, for the factors mentioned above. Read more: Bangladesh shifts fiscal gears as bank debt falls

The interim government has reversed years of aggressive bank borrowing, opting instead to repay outstanding loans in a move economists said could unlock fresh credit for the private sector and cool inflationary pressures. The policy shift marks a clear departure from the previous administration, which had leaned heavily on bank financing to meet its fiscal needs, they said. In contrast, the new government has prioritised debt reduction, expenditure restraint and project rationalisation, a combination analysts describe as rare in the country’s recent fiscal history. “The country’s economic landscape has seen a notable change over the last year, as the interim government is repaying its outstanding loans to the banking system,” said Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD). He said the administration’s approach is already forcing banks to reorient their portfolios towards the private sector after years of safe lending to the government. Mustafizur Rahman praised the decision not to take fresh bank loans this fiscal year while paying down legacy debt, calling it “a clear example of fiscal discipline” and a shift towards “a more responsible pattern of public expenditure”. Economist Abu Ahmed echoed that view, arguing that spending cuts – particularly on “highly ambitious and unnecessary” projects – had become essential to rebalance the credit market. Ahmed, who also chairs the Investment Corporation of Bangladesh (ICB), noted that government borrowing had previously crowded out private investment by drawing banks into low-risk lending to the public sector. Devt partners push govt for tougher tax measures amid debt pressure: NBR head “Banks got an opportunity to lend to the government, and they felt shy to invest in the private sector as there is a risk of recovery,” he said. Debt Reversal Data from the Bangladesh Bank shows a dramatic turnaround. Between July and October of FY2025–26, the government repaid Tk 503 crore to the banking system. During the same period last fiscal year, it had borrowed Tk 15,450 crore. The total net government debt with banks has also edged down. From Tk 5,50,904.96 crore at the end of June, it fell to Tk 5,50,401.65 crore by 30 October.On that day alone, repayment totalled nearly Tk 1,009 crore, including Tk 899 crore to the Bangladesh Bank and Tk 2,541 crore to scheduled banks, driven largely by clearance of short-term “Ways and Means Advance” obligations. Non-Bank Funding Rises The government has simultaneously strengthened its reliance on non-bank financing. Between July and October, it raised Tk 9,565.52 crore through treasury bills and bonds sold to non-bank financial institutions, insurers and individual investors. Excluding National Savings Certificates, total domestic borrowing from non-bank sources stands at Tk 9,062 crore. Economists say the fiscal tightening reflects a broader rethink of development spending. The interim government has cancelled or suspended numerous non-priority and non-profitable development projects, while slowing the pace of many others. IMF-WB proposes unified debt management office in Dhaka to strengthen public debt governance Insiders attribute the lower debt needed to this project screening, along with stricter revenue management. Former National Board of Revenue chairman Dr Muhammad Abdul Mazid said stronger-than-expected tax collection in the first quarter had also supported the government’s ability to repay loans. “This strong revenue position, combined with the government’s firm stance on expenditure control, has made it possible to repay debt instead of taking new loans,” he said. He said reduced government borrowing should ease inflationary pressure while expanding banks’ lending space to the private sector, a shift that could boost production and job creation. Risks Ahead Despite widespread praise for the government’s fiscal prudence, analysts warn that prolonged delays or cuts in development projects risk slowing investment and dragging on growth. For now, however, Bangladesh’s banking sector is preparing for a new era in which the government is no longer its largest and most reliable borrower – and the private sector may once again take centre stage in the credit market. Read more: Banking, power, revenue reforms in focus as govt faces IMF debt concerns: Salehuddin

Union Bank PLC, a listed entity reportedly affected by financial irregularities linked to the S. Alam Group, recorded a staggering per-share loss of nearly Tk 249 in 2024. The summary of the bank’s audited financial report for 2024 was published on Tuesday (November 18) through the Dhaka Stock Exchange (DSE). This massive loss translates to a net deficit of approximately Tk 26,000 crore, according to the audited financial statements. The figure represents an 88-fold increase in the bank’s net loss compared to the previous year, when it reported a net loss of over Tk 292 crore. A review of the published summary highlights the severity of the bank’s financial condition. In response to the crisis affecting Union Bank and four other distressed lenders, Bangladesh Bank (BB) has decided to merge five Islamic banks into a single entity, to be named the ‘Combined Islamic Bank’. Islami Bank customers organise human chain against S. Alam era appointees The five banks involved in the merger are: ·         Union Bank ·         First Security Islami Bank ·         Social Islami Bank (SIBL) ·         EXIM Bank ·         Global Islami Bank According to information from Bangladesh Bank, the 'Combined Islamic Bank' will have a total capital base of Tk 35,000 crore. The government will provide Tk 20,000 crore of this capital, while the remaining Tk 15,000 crore will be raised by converting depositors’ funds into shares of the new bank. The central bank has appointed Nazma Mobarek, Secretary of the Financial Institutions Division, as chairperson of the newly-merged entity. Read more: Capital flight forces merger of 5 Shariah-based banks: BB Governor

Bangladesh Bank Governor Dr Ahsan H Mansur on Sunday (November 16) said a substantial portion of the capital from the country’s five troubled Shariah-based banks has been siphoned off abroad, leaving no option but to merge them to safeguard the sector. He made the remarks while speaking at the opening session of the Bangladesh Islamic Finance Summit 2025, held at a city hotel. The three-day summit aims to position Bangladesh as a key Islamic finance hub in South Asia. “Much of the capital from the five Shariah-based banks has been taken out of the country. Unfortunately, even the most dynamic Islamic bank in the country was hollowed out,” the governor said. The five banks currently undergoing the merger process are EXIM Bank, First Security Islami Bank, Global Islami Bank, Union Bank, and Social Islami Bank. Read more: Compensation for small investors in merged banks under review: Central Bank Bangladesh Bank dissolved the boards of all five banks and appointed administrators on November 5, initiating the formation of a new entity named Sammilito Islami Bank (Combined Islamic Bank). Dr Mansur emphasised that transparency is essential to revitalising and strengthening the banking sector. He urged active participation from all stakeholders, including investors, depositors and employees, to ensure the success of the consolidation. If strong governance can be maintained during the merger process, the initiative will ultimately benefit the country’s economy, he added. City Bank Managing Director and CEO Mashrur Arefin attended the event as the special guest. Among others, M Kabir Hassan, professor of finance at the University of New Orleans and Dr Eskandar Shah Mohd Rashid, CEO of ISRA, also spoke at the opening ceremony. The summit brought together regulators, Shariah scholars, Islamic banking professionals, and high-level delegates from countries including Bahrain, Pakistan, Malaysia, and the United States. Discussions will focus on strengthening governance, expanding financial inclusion, and integrating AAOIFI’s global Shariah, governance and accounting standards into Bangladesh’s Islamic finance framework. Read more: BB orders strict loan data updates to bar defaulters from election race

Bangladesh Bank has ordered all scheduled banks to promptly update loan repayment data as prospective MP candidates, many of them business and political figures, scramble to clear defaults and overdue installments to remain eligible for the national polls. Managing directors of various banks, non-bank financial institutions (NBFIs), and Bangladesh Bank officials said they are receiving a surge in applications for loan regularisation. In response, the Credit Information Bureau (CIB) of Bangladesh Bank (BB) has issued a strict directive to all banks and financial institutions nationwide, ordering rapid updates of loan-related data to confirm the financial eligibility of potential candidates. Bangladesh Bank eases SME loan rules for refinance fund amid rising defaults Bangladesh Bank officials said on Saturday that even if a borrower secures a stay order from a court, financial institutions must report the accurate status of the loan to the CIB without any alteration. The central bank emphasised that there will be no scope to conceal information or offer ‘arbitrary’ concessions. A special meeting was held on October 29 with CIB representatives from all banks and NBFIs, where institutions were informed of the government’s firm instruction to complete loan data updates before the election to ensure no loan defaulter can contest. “The Bangladesh Bank has made it clear that the government will not allow any loan defaulter to become a candidate in the upcoming election,” said a CIB official. Arif Hossain Khan, Executive Director and spokesperson of Bangladesh Bank, said the central bank is updating customers’ loan statuses as per government instructions. He added that providing updated credit information to Bangladesh Bank is a routine responsibility of banks. Govt may compensate investors in 5-bank merger: Bangladesh Bank The central bank has also directed all institutions to strictly follow existing rules concerning borrowers attempting to reschedule long-overdue defaulted loans ahead of the election. No exceptions, special privileges, or rule violations will be permitted for rescheduling. All financial institutions, particularly those yet to submit their default data to the CIB, have been ordered to do so immediately. Updated reports detailing the full status of all new and ongoing loans, based on month-end outstanding balances, are mandatory. Banks have been specifically instructed to update the following information: Accounts of ongoing and settled loans, along with accurate balances and classification status, Maturity dates and overdue balances, Number and value of defaulted instalments, and details of installment payments or recoveries. To ensure round-the-clock verification of loan information for potential candidates, Bangladesh Bank has directed every bank branch to appoint a dedicated officer. Their names and mobile numbers must be submitted to the central bank. Bangladesh Bank directs MFS providers to halt online gambling transactions Electoral law clearly states that a candidate will be disqualified if their bank loan status is not classified as ‘regular’ up to seven days before the submission of nomination papers. Officials concerned believe this rigorous initiative by Bangladesh Bank will play a decisive role in preventing loan defaulters from securing nominations ahead of the election.

The Bangladesh Bank has settled US$1.61 billion in import payments to the Asian Clearing Union (ACU) for September and October 2025, keeping the country's foreign exchange reserves above the $31-billion mark. Following Sunday’s (9th November 2025) payment, the gross foreign exchange reserves now stand at $31.14 billion, higher than September’s $30.31 billion recorded after a similar $1.5 billion ACU payment. Based on the International Monetary Fund’s (IMF) Balance of Payments and International Investment Position Manual (BPM6) methodology, the reserve currently amounts to $26.44 billion, up from $25.40 billion in September. RCBC requested to forfeit $81m over Bangladesh Bank reserve heist Before the latest ACU settlement, the gross reserve was $32.71 billion, while the BPM6 figure stood at $28 billion. The central bank has been publishing reserve figures under the IMF’s BPM6 system since June 2023, in line with the IMF loan conditions. At that time, the reserve was $24.75 billion. Last week’s reserve figure of $32.71 billion was reportedly the highest in the past 32 months. The ACU (Asian Clearing Union) is a regional payment mechanism that facilitates trade settlements among member countries every two months. Its current members are Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, and Pakistan. Sri Lanka, a former member, withdrew amid its economic crisis and has yet to rejoin despite signs of recovery. Bangladesh’s foreign exchange reserves had peaked at $48 billion in August 2021 but later declined steadily, dropping to around $16 billion during the final days of the previous Awami League government. BB reserve heist review committee’s tenure extended for 3rd time Since the government transition, tighter measures against money laundering have reduced hundi (illegal money transfer) operations, contributing to higher formal remittance inflows. Remittances reached $10.90 billion from the start of the current fiscal year to November 8, representing a 14 percent rise compared to the same period a year earlier.

Economists and banking experts have expressed deep concern over the government’s plan to merge five struggling Shariah-based banks into a single entity named United Islami Bank, saying such a move will not solve the underlying problems of the banking sector. Bangladesh Bank, however, remains confident that the merger will help restore depositors’ confidence in the affected banks. Speaking at a seminar titled ‘Transition of Banking Sector in Bangladesh: Challenges and the Way Forward’ organised by the Department of Banking and Insurance of Dhaka University on Tuesday, experts said merging banks is not a sustainable solution. Without addressing the root causes, they warned, the crisis could deepen once an elected government takes office. The central bank has decided to merge five Shariah-based banks — First Security Islami Bank, Social Islami Bank, Global Islami Bank, EXIM Bank, and Union Bank — into one state-owned large Islamic bank. Bangladesh Bank expects to complete the merger by November. These banks have been plagued by high non-performing loans (NPLs), in some cases exceeding 90 percent, and have repeatedly required liquidity support from the central bank. After several unsuccessful bailouts, the Bangladesh Bank, with the approval of the Finance Ministry and the Council of Advisers, opted for a final merger plan. “Bailing out private banks with public money is a bad decision. On the other hand, turning distressed banks into state-owned institutions in the name of gaining public confidence is simply cheating,” said former Director General of the Bangladesh Institute of Bank Management (BIBM) Toufic Ahmad Choudhury. He said the biggest problem in Bangladesh’s banking sector is the swelling NPLs. “Every bank needs to form a loan workout committee to handle bad loans. Instead of doing that, the central bank has chosen the merger path,” he said, warning that United Islami Bank could become “the biggest problem in the banking sector” in the future. Dr Mahfuz Kabir, Research Director at the Bangladesh Institute of International and Strategic Studies (BIISS), said the decision to merge banks without considering the impact on capital market investors was unjustified. “Bangladesh Bank must have a clear plan for shareholders of these banks. If the merger fails to resolve the issues, what will the central bank do next? Such contingency measures must be considered before going ahead,” he said. BNP to ensure Bangladesh Bank’s full independence: Khosru Sayema Haque Bidisha, Dhaka University’s Professor of Economics and Pro-Vice Chancellor, however, said the situation has reached a point where there is no alternative to mergers. “We urgently need to form a Banking Commission, and the selection of bank boards must be made more stringent,” she suggested. Despite the concerns, Bangladesh Bank remains optimistic about the merger outcome, as Adviser to the Governor Ahsan Ullah said, “This will create the best Islamic bank in the country’s history.” He admitted that these banks had repeatedly received financial assistance from the central bank but failed to recover. “We can learn from past merger failures. This time, however, the merger will bring positive results,” he said. Citing Janata Bank’s example, he said, “Although Janata Bank has around 70 percent NPLs, its situation has not deteriorated like these five banks. Once merged into a state-owned institution, depositors of these banks will be the ultimate beneficiaries.” Bangladesh Bank Deputy Governor Kabir Ahmed attributed the crisis to a ‘moral collapse’ rather than just financial weakness. “What we are witnessing in the banking sector is not an economic or structural crisis — it’s an ethical one,” he said. Expressing optimism, Kabir added that inflation is expected to ease further while reserves will increase. “With reserves at $32 billion, and likely to reach $34 billion soon, the economy is heading back toward a comfort zone,” he said. The deputy governor reaffirmed that the central bank’s current priority is to restore macro-financial stability in the banking sector. Professor Shahidul Zahid, Chairman of the Department of Banking and Insurance at Dhaka University, presided over the seminar.    

Corporate Social Responsibility (CSR) spending by banks in Bangladesh has plummeted to its lowest level in a decade, dropping to Tk 150.56 crore in the first half of 2025, less than half of the previous six months’ outlay, according to the latest Bangladesh Bank data. This is the lowest CSR expenditure in 10 years, dropping even below the Tk 254 crore recorded in the first half of 2015. The steep drop in CSR spending has sparked questions about banks’ commitment to social causes and is being seen by analysts as a sign of shifting priorities. A review of central bank figures shows CSR spending has fluctuated in recent years. It stood at around Tk 298 crore in July–December 2021, rose sharply to Tk 514 crore in the same period of 2022, then slid to Tk 353 crore in the latter half of 2023. The plunge to Tk 150 crore in early 2025 is largely being linked to shifts in the country’s political landscape. Bank officials say that under the previous government, institutions were often pressured to channel CSR funds into education, healthcare, events or donations at the behest of political figures, local representatives or other influential individuals. Much of this spending, they argue, went beyond genuine social responsibility. Since the political movements of July 2024 and the change in government in August, that pressure has eased considerably. Banks are now exercising greater discretion over CSR allocations, resulting in a steep fall in expenditure. “Previously, CSR budgets were often used according to the wishes of political or influential people,” a branch manager of a private bank told UNB on condition of anonymity. “The decisions on whom to give to and where were made from the outside. Now there is no such pressure. Banks are spending based on their own judgment, and consequently, the expenditure has decreased significantly,” he said. BB to appoint administrators for merger of five troubled Islami banks Economist Mashrur Reaz told UNB that CSR spending needs more transparency and accountability. Political influence, he warned, often diverts funds to unproductive areas, undermining the true intent of corporate social responsibility. Under Bangladesh Bank regulations, commercial banks must allocate a portion of their net profits to CSR. Yet a lack of reliable data and oversight about how and where the money is used has long been a source of controversy. Bangladesh Bank guidelines stipulate that 30 percent of CSR funds should go to education, another 30 percent to health, and 20 percent to environmental and climate change initiatives. The remaining 20 percent may be used for income-generating activities, disaster management, infrastructure, sports and other areas. The report shows that during the period under review, 61 scheduled banks disregarded these instructions, spending 55 percent (Tk 83 crore) on ‘other’ purposes. Only 22.75 percent (Tk 34.25 crore) went to education, 18.67 percent (Tk 28.12 crore) to health, and a meagre 3.46 percent (Tk 5.21 crore) to environmental and climate change projects. Thirteen banks, including Janata Bank, Agrani, Basic Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, Bangladesh Commerce Bank, National Bank, Padma Bank, Community Bank, SBSC, Union Bank, Global Islami Bank, and the National Bank of Pakistan, did not spend any money on CSR during the period, according to the central bank report.