In a sweeping move to rescue five failing Sharia-based lenders, Bangladesh Bank has implemented a mandatory “haircut” on the returns of millions of savers. Under a new directive issued on Wednesday, depositors will be stripped of all profits earned over a two-year period, covering 2024 and 2025. This drastic measure is part of an international bank resolution strategy designed to stabilise the financial system as these troubled institutions merge to form a single entity: United Islamic Bank.
Wiping Out Two Years of Returns
The central bank’s instruction to the administrators of the five affected banks mandates an immediate recalculation of all account balances. According to the order, no profit or gain can be considered for any deposit held between 1 January 2024 and 28 December 2025.
Because these banks suffered catastrophic losses during this window, the central bank has determined that the 7% to 9% profit rates previously promised to savers cannot be honoured. Consequently, the “haircut” will be applied directly to the account balances, effectively reducing the final sum available to depositors.
The Financial Crisis in Numbers
The scale of the mismanagement within these institutions is reflected in the staggering gap between their deposits and their outstanding, often defaulted, loans.
| Financial Indicator | Total for the Five Banks |
| Number of Depositors Affected | 7.5 Million |
| Total Deposit Liabilities | 1.42 Trillion BDT |
| Total Loan Disbursement | 1.93 Trillion BDT |
| Equity Value for Shareholders | Zero (Wiped Out) |
| Merged Entity Name | United Islamic Bank |
The Involved Lenders
The five banks undergoing this forced consolidation are:
First Security Islami Bank
Global Islami Bank
Union Bank
Social Islami Bank
Exim Bank
Political Links and Siphoned Assets
This institutional collapse is deeply rooted in the previous political landscape. Four of the five banks were under the control of the S. Alam Group, led by Saiful Alam, while Exim Bank was chaired by Nazrul Islam Mazumder. Both men were known for their close ties to the recently ousted Prime Minister, Sheikh Hasina.
The central bank had already declared the shares of these banks to be of zero value, wiping out the founders’ and investors’ equity. However, the 1.93 trillion BDT loan portfolio remains a significant burden, as much of this capital was reportedly siphoned off through irregular channels during the previous regime.
A Bitter Pill for 7.5 Million Savers
The central bank maintains that this “Resolution Scheme” is the only path forward to prevent a total systemic collapse of the Islamic banking sector. By resetting account balances to their December 2025 positions—minus the two years of profit—the regulator hopes the new United Islamic Bank can start on a solvent footing. For the 7.5 million affected savers, it is a painful financial blow necessitated by years of unchecked corporate and political malfeasance.