The government has approved a consolidation plan for five struggling Shariah-based banks, agreeing to provide budgetary support of about Tk 20,200 crore to carry out the merger.
The total estimated injected capital, however, will be Tk聽35,200 crore. Beside the government鈥檚 Tk 20,200 crore, shares will be issued worth Tk聽15,000 crore in favour of government-run institutions against their deposits held聽in聽these聽banks
The decision was taken at a meeting of the Financial Institutions Division under the finance ministry on Sunday, chaired by finance adviser Salahuddin Ahmed. Bangladesh Bank governor Ahsan H Mansur joined virtually, while FID secretary Nazma Mubarak and senior officials were present.
The five banks involved are First Security Islami Bank, Global Islami Bank, Union Bank, Social Islami Bank, and EXIM Bank.
According to officials, the finance ministry has agreed in principle with the central bank鈥檚 detailed merger plan.
Among them, four banks under the control of S Alam Group 鈥� First Security Islami, Global Islami, Union Bank, and Social Islami Bank 鈥� have already agreed with the merger plan.
EXIM Bank, however, has sought more time before joining the process, saying it needs space to stabilise its operations.
The collapse of these banks has largely been attributed to massive lending to S Alam Group through multiple fronts.
Investigations revealed that the group received more than 1 lakh crore in loans, much of which have turned into defaults, creating severe liquidity stress.
As a result, these banks have struggled to honour withdrawal requests, forcing the regulator to step in.
The government鈥檚 decision follows the Bank Resolution Ordinance 2025, promulgated on May 9, which gives Bangladesh Bank sweeping powers to take over weak banks, transfer assets, create bridge banks, and ensure continuity of services.
The ordinance also bars existing shareholders from selling stakes once the resolution begins and allows BB to determine transfer prices of distressed institutions through competitive bidding.
A six-member subcommittee headed by Bangladesh Bank deputy governor Md Kabir Ahmed has been formed to implement the merger.
The merger marks the first large-scale attempt to restructure Shariah-based banks in Bangladesh and is being seen as a critical test of the government鈥檚 commitment to restoring confidence in the banking sector, which has been shaken by repeated loan scams and rising defaults.
