5 Shariah banks now United Islami Bank
Staff Reporter :
The Bangladesh Bank has given its final approval to merge five financially distressed Shariah-based banks into a single entity named United Islami Bank, removing the last regulatory barriers for the new institution to begin operations.
The approval came at a central bank board meeting on Sunday, officially clearing the way for what will become the country’s largest state-owned Islamic bank.
The five banks being consolidated are First Security Islami Bank, Global Islami Bank, Union Bank, Exim Bank, and Social Islami Bank.
This follows the Ministry of Finance’s issuance of a Letter of Intent (LoI) on 9 November, after the government completed key regulatory steps under the Bank Company Act, including obtaining name clearance from the Registrar of Joint Stock Companies (RJSC) and opening the bank’s current account.
According to Bangladesh Bank officials, the final approval now allows the merged institution to commence formal operations. The central bank will soon release detailed operational guidelines covering depositor payments, profit rates, staffing structures, and other matters.
During the initial settlement phase, ordinary depositors will be permitted to withdraw up to Tk 2 lakh, with small savers receiving top priority.
On 5 November, the central bank dissolved the boards of the five banks, placed them under direct control, and appointed administrators from within Bangladesh Bank. Managing directors of the banks were also instructed to resign.
A draft outline from the central bank estimates the merger will require Tk 35,000 crore. Of this, Tk 20,000 crore will come from the government effectively taxpayers’ money while Tk 10,000 crore will be sourced from the deposit insurance fund, pending legal changes to allow it to be used as a loan.
The remaining Tk 5,000 crore is expected from multilateral lenders such as the IMF, World Bank, and ADB as part of broader financial sector reforms. These external funds will also have to be repaid by taxpayers.
According to the draft plan, small savers will be safeguarded through early payouts to maintain public confidence, while large institutional deposits including corporate and state entities will be converted into equity in the new bank.