Five Islamic banks grappling with a severe liquidity crisis are merging, but the ongoing struggle for survival has reached a tipping point, with customer distress at an all-time high.
The banks involved—First Security Islami Bank, Social Islami Bank, Global Islami Bank, Union Bank, and Exim Bank—are currently unable to process even the most urgent withdrawals, such as those needed for medical treatment in ICU units, overseas scholarships, or family weddings.
Customer complaints at various branches reveal that new deposits have ceased entirely, while customers are unable to retrieve their existing funds. Bangladesh Bank’s support remains suspended, further exacerbating the situation.
In response to the crisis, Bangladesh Bank has announced the merger, suggesting that the new entity could be named ‘United Islamic Bank’ or ‘Sammilito Islamic Bank’. While the merger process has begun, it has been painfully slow, increasing panic and uncertainty among depositors.
Customers are becoming increasingly frustrated, with reports of daily arguments and even physical altercations with bank officials. One depositor shared: “My father is in the ICU, but I can’t access the money for his treatment. The government says it will take responsibility, but no one knows when.”
Economists have pointed to years of poor management and reckless loan distribution as key contributors to the crisis. Dr. Zahid Hossain, former Chief Economist at the World Bank, commented, “The government is trying to restructure these banks by merging them, but Bangladesh Bank will only inject new funds after the merger. The ongoing suffering of customers is truly tragic.”
Bangladesh Bank Governor Dr. Ahsan H. Mansur confirmed that the central bank has already provided Tk 40,000 crore in support to the five banks, but the situation remains dire. “Since the situation has not improved, we have decided to merge these banks and recapitalise them. Initially, it will operate as a government-owned bank, and later it will be privatised,” he explained.
Bank officials have admitted that returning customer deposits is impossible without fresh capital. Mohammad Nurul Amin, Chairman of Global Islami Bank, stated, “New deposits are not arriving, and old loans are not being recovered. In this situation, returning customers’ money has become extremely difficult.”
A senior Bangladesh Bank official indicated that the merged bank could be operational within 15 days of receiving its license and appointing an administrator. Initial funding will be sourced from the Deposit Insurance Fund, which holds approximately Tk 12,000 crore.
Economists, however, have warned that unless the new bank is established with strong governance, efficient management, and transparent credit policies, it risks repeating the same problems that led to the crisis in the first place.