STAR BUSINESS REPORT

The Bangladesh Bank (BB) has waived the requirement to maintain provisions against funds of banks and non-bank financial institutions stuck in five merging shariah-based lenders.

The decision was taken at a recent internal meeting of the central bank, officials familiar with the matter said, at a time when more than Tk 15,000 crore remain tied up in the troubled institutions.

As these funds have not been recovered for a prolonged period, the regulator has lifted the requirement to maintain provisions against them, they added.

The five merging banks are First Security Islami Bank, Global Islami Bank, Union Bank, Social Islami Bank, and Exim Bank. They were brought under the merger process by the interim government through the Bank Regulation Ordinance, 2025.

Around Tk 10,000 crore of the stuck funds belong to Islami Bank Bangladesh alone.

Banks are required to set aside 0.5-5 percent of operating profit against general category loans, rising to 20 percent for substandard loans, 50 percent for doubtful loans, and 100 percent for bad or loss category loans.

Initially, the BB’s bank supervision departments and the financial institutions and markets department had instructed banks to maintain provisions against funds stuck in the troubled banks.