FROM PAGE B1

The interim government has initiated procedures to merge five troubled Islamic banks into the country’s largest state-owned Shariah bank.

The banks are First Security Islami Bank, Global Islami Bank, Union Bank, EXIM Bank, and Social Islami Bank.

The plan, drawn up under the newly enacted Bank Resolution Ordinance 2025, will require an estimated Tk 35,200 crore in capital for the as-yet-unnamed institution.

Of this, Tk 20,200 crore will come from the government, while Tk 15,000 crore will be mobilised from institutional funds and by converting institutional deposits.

According to finance ministry officials, the move is intended to avert a costly liquidation process and restore confidence in shariah-compliant finance.

At the same time, it highlights the depth of the crisis engulfing privately run Islamic lenders, many of which were linked to politically connected conglomerates accused of siphoning funds.

Forensic audits commissioned by the government have revealed severe mismanagement, with non-performing loan ratios exceeding 90 percent at three of the banks.

Regulators now argue that consolidation is the only viable path forward after years of weak oversight.

Earlier, a six-member working committee led by Kabir Ahmed was formed to plan and oversee the process.

The merger follows consultations held by central bank officials with the boards and management of the five lenders between September 2 and 4, in which BB Governor Ahsan H Mansur also participated virtually.

First Security Islami Bank, Union Bank, and Global Islami Bank agreed to the regulator’s plan, while EXIM Bank and Social Islami Bank opposed it.

Following the change of government in August 2024, Bangladesh Bank dissolved the lenders’ previous boards and appointed new ones.

Forensic audits by global accounting firms, commissioned by the interim government, exposed their precarious financial health.

Non-performing loan ratios stood at 96.37 percent at First Security Islami, 97.8 percent at Union, 95 percent at Global Islami, 62.3 percent at Social Islami, and 48.2 percent at EXIM Bank.