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

The government and Bangladesh Bank injected Tk 35,000 crore as capital into the merging bank, while the central bank also provided the five banks with additional liquidity support.

Under the ordinance at the time, former owners were barred from involvement, as many were accused of financial scams and embezzlement.

The boards of four of the banks were dominated by the controversial S Alam Group, led by its Chairman Mohammed Saiful Alam, while Exim Bank was long controlled by Nassa Group Chairman Md Nazrul Islam Mazumder.

The BNP-led government has now amended the ordinance, passing it into law in parliament on Friday after Finance Minister Amir Khosru Mahmud Chowdhury placed it before the House.

Bangladesh Bank officials told The Daily Star that concerns remain over how these banks will be managed if former owners return and whether depositors will be able to recover their money.

They also said that if a bank is returned to its previous owners, it cannot easily be taken back again.

“This raises doubts about whether they would be able to run the banks properly and ensure full legal and regulatory compliance,” one official said, adding that the return of the previous owners could hinder the ongoing merger process.

The act empowers the Bangladesh Bank to permit previous owners or other eligible applicants to acquire a bank’s shares, assets, and liabilities.

Under the new law, applicants, including former directors or investors, must commit to fully repaying all financial support previously extended by the government and the central bank.

They are required to inject fresh capital to address existing deficits and restore financial health, and settle outstanding claims of depositors, domestic and foreign creditors, and third parties.

About accountability during the banks’ restructuring process, the act states that any losses incurred by individuals or institutions must be compensated.

The applicants must also agree to restrictions on share transfers and commit to strengthening corporate governance, risk management, and compliance structures.

Before approval, the Bangladesh Bank will have to conduct due diligence and seek the government’s clearance. Even after approval, the central bank will closely monitor the merged entity for two years, with a special committee reviewing compliance.

Failure to meet conditions could lead to cancellation of approval and further regulatory action under existing laws.

Contacted for comments on the new law, Zahid Hussain, former lead economist at the World Bank’s Dhaka office, warned that the provision undermines past reform efforts.

“If, under this law, the previous owners return and reclaim their organisations, the integrity of the new structure created after the merger could be lost. In that case, all merger-related work would effectively become meaningless,” he said.

He said it is widely understood that a large portion of loans in these banks have already turned bad, largely taken by related parties.

“The responsibility for this distress lies with the sponsors and related borrowers,” he said. Allowing them to return, he argued, will set a damaging precedent.

“It reinforces a culture of impunity in the financial sector, where wrongdoing is not punished. Governance will weaken further.

“After so many reforms, audits, and a formal merger process, if everything can be reversed through a legal adjustment, it raises serious doubts about the sustainability of institutional reform,” Zahid said.

“Ultimately, the law appears to reward those responsible for the crisis rather than holding them accountable,” he added.