Govt seeking strategic partner in Muslim countries for Sammilito Islami Bank

The government is approaching Muslim-majority countries and Islamic institutions to find a strategic partner for Sammilito Islami Bank, formed by merging five troubled private banks plagued by irregularities and corruption during the Awami League government.

Qatar has already been approached to invest in the state-owned bank. During his recent visit to Qatar, Prime Minister's Adviser on Finance and Planning Rashed Al Mahmud Titumir formally proposed that the country become a strategic partner of Sammilito Islami Bank.

"We have already proposed that Qatar become a strategic partner. Discussions were held there, but nothing has been finalised yet," Titumir told The Business Standard.

"Further discussions will take place with Qatar, and we will also approach other Muslim countries and organisations to become strategic partners of Sammilito Islami Bank," he said.

Titumir said the government had cancelled its earlier decision to impose a "haircut" on depositors and decided to repay their deposits in full.

"There are two ways to repay depositors – providing money from the treasury or bringing a foreign country or organisation into the bank's ownership as a strategic partner," he said. "The government is therefore seeking strategic investors from Muslim countries"

A strategic partner in a bank typically contributes to long-term growth, technology upgrades and business expansion, while playing an active role in management and decision-making. 

Such partners can also strengthen a bank's capital base through substantial long-term funding or equity investment and provide financial support during crises.

FDR account holders must remain under scheme to receive profits

The Banking Regulation Department of Bangladesh Bank in a circular yesterday (31 August) said customers of Sammilito Islami Bank can withdraw the full amount held in their fixed deposit receipts (FDRs) at once, but they will not receive any profit if they do so. 

FDR account holders must remain under the Bank Resolution Scheme to receive profits.

Meanwhile, depositors with current and savings accounts will be able to withdraw their principal amount in full at once, along with the applicable profit.

Sammilito Islami Bank is set to begin returning the principal deposits of individual customers from 7 September. Initially, customers will be allowed to withdraw or encash their entire principal amount in a single transaction. However, they will not receive any profit in this case. The bank's branches will start accepting applications for this from today.

According to Bangladesh Bank's announcement, normal transactions for individual customers are scheduled to resume from today. 

However, several days are needed to complete preparations, including sending cash requisitions to branches and sub-branches, ensuring the supply of cash from Bangladesh Bank and establishing secure cash-management arrangements. As a result, the bank has decided to begin the full-scale return of depositors' funds from 7 September.

Sammilito Bank's status

Sammilito Islami Bank was formed by merging First Security Islami Bank, Social Islami Bank, Global Islami Bank and Union Bank, all of which were controlled by the S Alam Group. 

The fifth bank, Exim Bank, was controlled by businessman Nazrul Islam Mazumder, who was considered close to the Awami League.

The five banks had struggled to return depositors' money amid severe financial distress. The interim government subsequently merged them into a single state-owned bank.

According to Bangladesh Bank data, the merged banks have around 76 lakh depositors with deposits totalling Tk1,42,000 crore. Individual depositors hold around Tk15,000 crore in savings accounts.

Of the five banks' combined loans of Tk1,92,000 crore, around 86% are now classified as non-performing, while their capital shortfall exceeds Tk150,000 crore.

The state-owned Sammilito Islami Bank began operations in November last year. It has authorised capital of Tk40,000 crore and paid-up capital of Tk35,000 crore.

The government has provided Tk20,000 crore of the paid-up capital, while the remaining Tk15,000 crore is to be issued as shares to depositors.