A writ petition has been filed in the High Court challenging the legality of the government’s decision to merge five financially troubled private banks.
The petition was submitted Tuesday on behalf of general investor Shahidul Islam by Barrister Mahsib Hossain. The Bangladesh Bank governor, the finance secretary, and other relevant officials were named as respondents.
On October 9, the Interim Government’s Advisory Council approved a proposal to merge five Shariah-based banks—First Security Islami Bank, Global Islami Bank, Union Bank, EXIM Bank, and Social Islami Bank—into a single new institution. Two names have been proposed for the merged bank: United Islamic Bank and Combined Islamic Bank. Officials say the new bank will operate on commercial and professional standards.
Chief Adviser Muhammad Yunus presided over the Advisory Council meeting. After the meeting, the Chief Adviser’s Press Secretary, Shafiqul Alam, told reporters that no employees would lose their jobs and no depositors would lose their savings as a result of the merger.
According to the initial plan, the merged bank will have an authorized capital of Tk 40,000 crore and a paid-up capital of Tk 35,000 crore. It will take over all assets and liabilities of the five banks. The government will provide Tk 20,000 crore in capital support—half in cash and the remaining half through the issuance of Sukuk bonds.
An additional Tk 15,000 crore from institutional depositors will be converted into equity through a bail-in process, with provisions to repay them later under the resolution plan.
The new bank will initially be state-owned, with a gradual transition to private ownership. The Press Secretary said the government aims to complete the privatization process within five years.
Bangladesh Bank expects the move to ease public anxiety regarding the troubled banks. The central bank is also preparing a plan to refund small depositors.