United Islami Bank set to be launched next week: BB governor
Earlier this month, the central bank granted initial approval and issued a letter of intent for the formation of United Islami Bank PLC, created through the merger of five troubled Shariah-based banks.
Bangladesh Bank Governor Ahsan H Mansur today (29 November) said the new commercial United Islami Bank, which will be formed through the merger of five Shariah-based banks, is set to be officially launched next week.
The Bank Resolution Ordinance is being followed for the merger of the five banks, he said while speaking at the "4th Economic Summit" at a hotel in Dhaka.
"The new bank will have a paid-up capital of Tk35,000 crore, with the government contributing Tk20,000 crore," he said, describing the initiative as creating a strong bank from five weak banks.
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Earlier this month, the central bank granted initial approval and issued a letter of intent for the formation of United Islami Bank PLC, created through the merger of five troubled Shariah-based banks.
Since the interim government assumed office last year, Bangladesh Bank has provided around Tk35,300 crore in liquidity support to these five banks.
The merged entity will see Nazma Mobarek, secretary of the finance ministry's Financial Institutions Division, appointed as the new chairman of its board, officials said.
The board will also gain seven new directors: five representing the government and two from the private sector.
The governor said that non-performing loans are a major issue, currently at 35%, and acknowledged that it will take five to 10 years to address the problem.
He also said that the policy rate should have a gap of 2.5-3% with inflation. Currently, inflation is 8.20%, and if it falls below this or into the 7% range, the policy rate will be reduced, he added.
Ahsan said that appropriate legal measures will also be taken for weak banks and financial institutions. "Nine financial institutions will be closed, with full government support for the process."
He warned that banks and non-bank financial institutions heading in a negative direction will be cautioned, and action will be taken as needed.
He said this is not an isolated incident, and legal provisions have been made for the process.
The governor emphasised that future governments will recognise and support the procedural initiatives taken to tackle challenges in the financial sector.
He also said that banks currently have sufficient US dollars. Since he joined as governor, the dollar rate has moved from Tk120 to Tk122.50, and the market is stable without intervention.
He added that all margins have been removed, and businesses can open letters of credit for any amount.
Regarding imports for the upcoming Ramadan, Ahsan said there is no concern as all necessary letters of credit have already been opened and smuggling has been controlled.
