Staff Reporter :
Bangladesh Bank is set to issue show cause notices to five Shariah-based banks on Wednesday, seeking explanations as to why they should not be merged in light of their deteriorating financial health. The move signals the formal initiation of the central bank’s proposed merger process for underperforming institutions.
The five banks in question are First Security Islami Bank, Global Islami Bank, Union Bank, Social Islami Bank, and EXIM Bank.
According to central bank officials, the decision comes amid claims by some of the banks that they remain financially viable and are capable of recovery without undergoing consolidation.
Bangladesh Bank will review the responses from the respective institutions before making a final decision.
If any of the banks assert that they are in a sound financial position, they will be required to promptly repay any outstanding borrowings from the central bank, meet deficits in the Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), and capital adequacy requirements, and comply fully with other regulatory obligations. In addition, the banks’ boards of directors and sponsors may be asked to inject fresh capital if they wish to continue operating independently.
Depending on each bank’s compliance with these conditions and the credibility of their recovery plans, the central bank may consider excluding one or more from the planned merger.
This development follows the enactment of the Bank Resolution Ordinance 2025, promulgated on 9 May. The ordinance grants Bangladesh Bank expanded powers to intervene in troubled financial institutions, including the authority to assume control, transfer assets and liabilities, and establish bridge banks to maintain uninterrupted banking services.
It also enables the central bank to determine the asset transfer price of distressed banks through open bidding processes and prohibits the sale of shares by existing shareholders once the resolution process begins.
The move is part of a broader regulatory effort to stabilise the country’s banking sector, improve governance, and safeguard depositors’ interests.
