More than a year after major loan scandals and politically connected corruption shook Bangladesh’s banking system, three large private banks—United Commercial Bank (UCB), IFIC Bank and Islami Bank Bangladesh—have staged a strong and somewhat unexpected recovery. Sweeping board reforms, the removal of influential controllers, and fresh regulatory oversight have helped restore depositor confidence, leading to significant inflows across all three institutions.
Together, these banks account for more than 15% of the country’s total deposits. In the first ten months of 2025, each reported double-digit deposit growth, a remarkable reversal after the panic withdrawals following the upheaval of 2024. Yet their revival masks a deeper structural problem: severe capital shortages that prevent them from lending at scale, investing in technology or competing effectively with stronger banks.
UCB has been the most dramatic example of this turnaround. Between January and September 2025, it added over Tk 10,000 crore in fresh deposits—more than double the total of the previous year. Retail customers now contribute 56% of total deposits, a clear sign that public trust has returned. The bank has also met CRR, SLR and ADR requirements. But its capital adequacy ratio remains at 7.69%, far below the mandatory 10%. Its proposal to raise Tk 775 crore through a rights issue and Tk 800 crore through subordinated bonds has been stuck at the securities regulator for four months, due to compliance concerns inherited from the previous board.
Islami Bank has also experienced a powerful rebound, posting Tk 19,000 crore in net deposit inflows in just nine months—currently the highest among private commercial banks. Strong remittance inflows have reinforced liquidity. However, years of hidden bad loans have left the bank with a 7% capital adequacy ratio and an extraordinary Tk 86,000 crore provision shortfall. With 82% of its shares tied to the S Alam Group—now seized by Bangladesh Bank—the bank cannot raise new capital until a court issues a final ruling.
IFIC, which experienced a sharp deposit drain during the July 2024 uprising, has recovered Tk 6,000 crore over the past year. The bank resumed lending after easing liquidity stress and is now relying on the government—its largest shareholder—to inject fresh capital. It is prioritising SME lending and planning to expand into rural microfinance using its network of 1,200 sub-branches.
Bankers and former regulators say that unless the securities regulator expedites approvals for new capital issuance, the recent recovery in deposits may not translate into long-term stability. The three banks, they warn, will remain vulnerable unless they can raise capital, attract strategic investors and rebuild their balance sheets fully.