In a major move to stabilise the financial system, Bangladesh Bank has declared five struggling Islamic banks inoperative, dissolved their boards, and initiated steps to merge them into a new government-owned entity — Sammilito Islami Bank Limited. The affected banks are First Security Islami Bank PLC, Global Islami Bank PLC, Union Bank PLC, EXIM Bank PLC and Social Islami Bank PLC.
Under the Banking Companies Regulation Ordinance, 1962, the boards of all five banks have been suspended, while operations continue under central bank supervision. Customers are assured that daily banking services, including ATMs, mobile banking, salaries, and cheque clearances, will remain uninterrupted.
The merger follows a proposal from Bangladesh Bank and recommendations from the Department of Financial Institutions (DFI), approved by the National Economic Council’s Advisory Committee on October 9, 2025.
Bangladesh Bank officials cited chronic financial weaknesses in the banks, including excessive classified loans, in some cases over 40% of portfolios, severe liquidity crises requiring repeated emergency funding, capital shortfalls, with Tier-1 ratios below regulatory requirements, poor loan loss provisioning and declining asset quality, negative net asset values (NAV) and plummeting market confidence and collapsing share prices.
Despite repeated liquidity support and restructuring efforts, these banks failed to recover, with governance lapses and weak internal controls further threatening their viability.
“These banks were no longer viable as independent entities,” a senior Bangladesh Bank official said. “Without intervention, the risks to depositors and the financial system were too high.”
The new state-owned bank will consolidate all assets, liabilities, branches (over 650 nationwide), employees, and customer accounts. An interim management team appointed by Bangladesh Bank will oversee the transition, with full integration expected within 90 days. The new bank will operate under strict Shariah compliance and prudential banking standards.
Chairmen and managing directors of the affected banks were urgently summoned to Bangladesh Bank headquarters on Wednesday and formally briefed on the board dissolutions and transition plan. Company secretaries have also received directives. Governor Dr. Ahsan H. Mansur is scheduled to address the media at 4 PM, sharing further details and preliminary audit findings.
This consolidation marks the largest restructuring in Bangladesh’s banking history and signals the central bank’s stricter oversight of Islamic finance institutions. Analysts say the move sets a precedent for combining religious compliance with strong financial discipline.
A special investigation cell will review prior management practices and related-party transactions. Bangladesh Bank will also publish a white paper detailing the financial and governance failures of the merged banks. Customers are advised to continue using existing accounts, with updates to be communicated officially.
PT/ra
