Desco’s Tk250cr caught in six troubled banks
It turns to cenbank to recover its revenue, employees’ provident and gratuity funds
Highlights:
- Desco seeks Bangladesh Bank help to recover Tk250 crore
- Funds are trapped across six financially distressed banks
- Four merged banks hold Tk209.44 crore of Desco deposits
- Padma and Commerce banks also lack repayment capacity
- Several troubled banks face severe non-performing loan problems
- Deposit rules prioritise small depositors, leaving institutions unclear
The state-owned electricity distributor Dhaka Electricity Supply Company (Desco) is seeking Bangladesh Bank's intervention to recover around Tk250 crore of its revenue and employees' provident and gratuity funds trapped in six financially distressed banks.
In a letter sent to Bangladesh Bank Governor Mostaqur Rahman on 11 August, Desco Managing Director Brigadier General Shamim Ahmed urged the central bank to take measures to facilitate the return of the funds.
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Desco said the deposits needed to be encashed urgently to ensure uninterrupted electricity supply, safeguard government revenue, and meet its financial obligations on time.
Desco has Tk47.94 crore deposited with Global Islami Bank, Tk55.27 crore with Union Bank, Tk59.96 crore with Social Islami Bank, and Tk46.27 crore with First Security Islami Bank.
Its deposits in these four banks total Tk209.44 crore. The four lenders, along with Exim Bank, were merged last year to form the state-owned Sammilito Islami Bank.
Desco also has Tk22.53 crore with Padma Bank and Tk17.36 crore with Commerce Bank.
Apart from Padma Bank, the other five banks were previously controlled by controversial businessman Saiful Alam, commonly known as S Alam.
Desco said the banks had failed to return its deposits even after they matured. The utility made repeated requests, both in writing and verbally, but received no positive response.
A senior Bangladesh Bank official, speaking on condition of anonymity, said funds stuck in the five merged banks would be repaid to customers in line with the applicable rules.
"Padma Bank and Bangladesh Commerce Bank, however, lack the capacity to repay large sums quickly," the official said. "Desco will therefore have to wait to recover its funds."
Banks remain financially fragile
The government merged First Security Islami Bank, Social Islami Bank, Global Islami Bank, Union Bank, and Exim Bank last year to form Sammilito Islami Bank. The five banks had combined deposits of Tk1,36,546 crore.
Following the merger, the government adopted a repayment policy under which small depositors would be prioritised. The BB has also provided funds from the Deposit Protection Fund to help address the banks' massive non-performing loans and liquidity shortages.
Meanwhile, Padma Bank remains in severe financial distress, according to officials of Bangladesh Bank's Off-site Supervision Department, which monitors banks' financial health.
The bank is grappling with high non-performing loans and a capital shortfall, with nearly 90% of its loans classified as non-performing, they said.
Bangladesh Commerce Bank is also facing a range of financial difficulties. According to BB data, the bank's 66% of its total loans were classified as non-performing as of 31 March.
The bank also had a substantial provision shortfall. Against a required provision of Tk1,004 crore, it had set aside only Tk375 crore as of the end of March.
Deposit repayment framework
The BB has a framework for returning deposits to customers of the five merged banks.
Under the Deposit Protection Act 2026, the maximum protected deposit is at Tk2 lakh, while depositors' claims have been preserved in the new bank under the resolution framework.
In July, the finance minister said depositors of troubled banks would eventually receive their principal and interest, although full repayment could take time because of the banks' losses.
In January, Bangladesh Bank initially allowed customers of the five banks to withdraw up to Tk2 lakh. In July, the limit was raised to Tk10 lakh for urgent needs, including medical treatment for depositors and their immediate family members.
However, the guidelines did not clearly specify arrangements for returning deposits held by institutions such as Desco.
