Cenbank gives final approval to merge 5 Shariah-based banks into 'United Islami Bank'

The Bangladesh Bank has given final approval to merge five troubled Shariah-based banks into a single entity named "United Islami Bank", clearing all the regulatory hurdles for the new institution to begin operations.

The approval was granted today (30 November) at a board meeting of the central bank, officially paving the way for the launch of what will now be the country's largest state-run Islamic bank.

The five banks are First Security Islami Bank, Global Islami Bank, Union Bank, Exim Bank, and Social Islami Bank.

Earlier, on 9 November, the Ministry of Finance granted the bank its initial approval, known as a Letter of Intent (LoI), following an application that required the government to complete regulatory steps, including securing a name clearance from the Registrar of Joint Stock Companies (RJSC) and opening the bank's current account, under the Bank Company Act.

According to central bank officials, with the final nod, the merged bank can now formally start operations. The Bangladesh Bank has announced that detailed guidelines, covering depositor payments, profit rates, salary structure and other operational issues, will be issued soon.

Ordinary depositors will be allowed to withdraw up to Tk2 lakh, with the highest priority being given to small depositors during the initial settlement phase.

On 5 November, the central bank took control of the five Islamic banks, declaring their existing boards defunct and appointing five central bank officials as administrators in each. The managing directors of those banks were also asked to resign.

The central bank's draft outline data shows that the merger will cost Tk35,000 crore. Of this, Tk20,000 crore will come directly from the government, meaning the money will come from the pockets of taxpayers.

Tk10,000 crore will be drawn from the deposit insurance fund, pending legal amendments to use it as a loan. The remaining Tk5,000 crore is expected from multilateral lenders, including the IMF, World Bank, and ADB, as part of broader financial sector reforms.

Even the external funds will ultimately be repaid by taxpayers.

Small savers will be protected through early payouts to safeguard confidence, according to the draft. But large institutional deposits -- corporates, state agencies, and others -- will be converted into equity in the new bank.