Bangladesh Bank has decided to issue show cause notices to five Shariah-based banks, asking why they should not be merged amid their worsening financial condition.
The notices are expected to be sent on July 2, marking the formal beginning of the merger process.
The five banks are First Security Islami Bank, Global Islami Bank, Union Bank, Social Islami Bank, and EXIM Bank.
Central bank officials said the decision came after some of the five banks claimed they were performing well and had the potential to recover without being merged.
Bangladesh Bank will review the banks鈥� responses before taking further action.
If any of the banks argue they are financially viable, the BB will ask them to immediately repay funds borrowed from the central bank, meet shortfalls in Cash Reserve Ratio(CRR) and Statutory Liquidity Ratio (SLR), and capital adequacy ratios, and comply with other regulatory requirements.
Their boards or sponsors will also be asked to inject fresh capital if they wish to continue operations independently.
Based on their compliance and financial recovery plans, the central bank will decide whether any of the five banks can be excluded from the proposed merger.
The move follows the promulgation of the Bank Resolution Ordinance 2025 on May 9, which empowers Bangladesh Bank to take over troubled banks, transfer assets, and set up bridge banks to ensure continuity of banking services.
The ordinance also allows BB to determine the transfer price for distressed banks through open bidding and bars shareholders from selling shares once the resolution process begins.
