In an attempt to bring back stability and confidence to the country’s troubled Islamic banking segment, the administrators recently appointed by Bangladesh Bank have taken active steps to normalize operations at the five Shariah-based banks currently undergoing a merger process.
The administrators - appointed only last Wednesday - have begun holding meetings with depositors to assure them of the safety of their funds, while also ensuring that customers can withdraw a certain amount of cash as needed. They are also focusing on ensuring that remittance beneficiaries receive their funds from expatriates on time, as part of their broader stabilization measures.
Meetings with Depositors to Rebuild Confidence: Following Bangladesh Bank’s orders to appoint administrators in the five banks, the teams have wasted no time engaging directly with stakeholders. At least two of the banks have already organized meetings with their clients, where the administrators urged customers not to panic over their deposits. “The government has now taken responsibility for these banks. There is no reason for depositors to worry about their money,” one administrator reportedly told clients during a meeting held outside Dhaka.
Administrators from two of the banks are also planning to travel beyond the capital to meet clients in regional branches to further strengthen public confidence. The central bank’s primary goal, according to officials, is to stop any further deterioration of the banks’ financial conditions. “From the very beginning, the administrators have been directed to assess the banks’ financial health thoroughly and prevent any worsening of their liquidity or asset positions,” a senior Bangladesh Bank official told The Daily Industry.
Governor Holds Briefings with Administrators: Soon after the appointments were made, Bangladesh Bank Governor Dr Ahsan H. Mansur held two rounds of virtual
meetings with the newly appointed administrator teams. During these discussions, he sought updates on operational challenges and provided several directives.
Administrators reported that an unusual rush for withdrawals had occurred at one branch in the Chattogram region shortly after the appointments were announced. However, they assured the governor that the situation was swiftly brought under control and that transactions elsewhere remained largely stable.
“The situation is under control now. The focus is on maintaining liquidity and depositors’ trust,” an administrator said, adding that banks have been instructed to submit daily reports detailing cash inflows and outflows.
Focus on Integration and Technology Challenges: The five Islamic banks are now working under a joint administrative oversight that aims to merge them into a single, stronger Shariah-based financial institution. However, the process comes with significant technical and organizational challenges.
According to central bank officials, one of the main hurdles is integrating the banks’ core technology systems. Currently, the five institutions operate on three different software platforms, which complicates the merger process.
“The integration of banking software is a crucial step. We must decide whether to introduce an entirely new platform or select one of the existing systems for all,” said a senior official from Bangladesh Bank. The banks also offer varying financial products and services, reflecting different operational philosophies despite being Shariah-based. Administrators are now evaluating how to harmonize these products to create a consistent service structure once the merger is complete.
Staff and Branch Management Also Under Review: Managing staff and branch operations across the five institutions is another major challenge. For now, Bangladesh Bank has directed administrators not to terminate any employees during the transition period. “All staff will remain in place initially, but branch restructuring may take place. Some branches might be relocated or merged,” an official familiar with the plan said.
The central bank also plans to implement a depositor protection scheme using the Deposit Insurance Fund. Customers may be able to withdraw up to Tk 200,000 from their accounts under this scheme if necessary. A circular detailing how and when depositors can access their funds is expected to be issued later this month, according to central bank sources.
Who Are the Administrators: Bangladesh Bank has appointed five senior officials to lead the administration teams at each of the Shariah-based banks. Shawkatul Alam, Executive Director of Bangladesh Bank, is serving as administrator of Exim Bank. Salah Uddin, another Executive Director, is in charge of Social Islami Bank Ltd (SIBL). Muhammad Badiuzzaman Didar, Executive Director, has been appointed to First Security Islami Bank Ltd (FSIBL). Md Maksuduzzaman, a Director at Bangladesh Bank, is leading Global Islami Bank. Mohammad Abul Hashem, also a Director, has been assigned to Union Bank Ltd. Each administrator is supported by four other officials from the central bank, meaning a total of 25 Bangladesh Bank officers are now directly involved in managing these institutions.
Merger Aims to Stabilize Islamic Banking Sector: The unprecedented appointment of administrators and the planned merger reflect Bangladesh Bank’s effort to stabilize a sector that has recently come under stress due to liquidity problems, poor governance, and allegations of irregularities.
In recent months, several Shariah-based banks faced difficulties in maintaining depositors’ confidence after reports surfaced about large-scale fund diversion and overexposure to connected lending. The situation had triggered panic withdrawals in some branches, particularly in Chattogram and Sylhet divisions.
Financial analysts believe that merging the banks into one strong Islamic institution could help restore discipline and confidence in the system. “Consolidation is a bold but necessary step. If done correctly, it can bring efficiency, reduce operational risks, and ensure better governance,” said economist Dr Zahid Hussain, former lead economist of the World Bank’s Dhaka office.
However, he cautioned that the process must be transparent and well-managed. “Without clear accountability and a strong management framework, merging five troubled banks could merely transfer risks rather than resolve them,” he added.
Central Bank’s Next Steps: Officials say the administrators will submit preliminary reports on their findings within the next two weeks. These reports will outline each bank’s financial health, liquidity status, and operational bottlenecks.
Once the merger plan is finalized, Bangladesh Bank is expected to appoint a unified management committee to oversee the transition into a single Shariah-based bank, with the central bank retaining partial control during the interim period. In the meantime, depositors have been urged to stay calm. “The banks are functioning normally, and transactions are ongoing,” said one Bangladesh Bank spokesperson. “Our priority is to protect the interests of depositors and ensure smooth financial operations across the Islamic banking system.” As Bangladesh’s banking sector grapples with ongoing challenges, the success of this initiative could set a precedent for future consolidations - signaling a new era of reform and oversight in the country’s financial landscape.
