Bangladesh Bank is developing a special payment scheme to protect depositors of five Islamic banks that are set to merge.
According to Bangladesh Bank data, the merging banks hold combined deposits of Tk 1.52 lakh crore, while outstanding loans have exceeded Tk 2.0 lakh crore.
Personal deposits alone total nearly Tk 46,000 crore.
Under the central bank’s plan, deposits of up to Tk 2.0 lakh will be promptly refunded under an insurance scheme.
Deposits exceeding Tk 2.0 lakh will be refunded in a phased manner, although the exact timeline has yet to be determined.
Refunds may carry a 4 percent return, but all existing deposit schemes will be cancelled. If a customer holds multiple accounts across these banks, they will be treated as a single account, and the insurance limit will remain at a maximum of Tk 2.0 lakh.
Institutional depositors, meanwhile, may receive shares in the new bank instead of cash. Borrowers’ terms will remain unchanged, and they must continue their instalment payments as per the previous schedule.
The new merged bank is projected to have assets of approximately Tk 2.2 lakh crore, with a paid-up capital of Tk 350 crore.
Funding for the merger will include Tk 2,000 crore from the government, Tk 1,000 crore from the Deposit Insurance Fund, and Tk 50,000 crore from international development agencies such as the IMF, World Bank, and ADB, which will be delisted after the merger.
Although the Bank Companies Act does not entitle general shareholders to compensation, Bangladesh Bank is considering alternative compensation options based on advice from the Ministry of Finance.
The merger announcement has already caused a major market slump, with the share prices of these five banks falling to less than half their face value of Tk 10. Currently, only about a dozen of the 36 listed banks are trading above their Tk 10 face value.
During the merger process, administrators will be appointed to replace the existing managing directors of the banks. These administrators will assess the banks’ financial health, maintain stability and have the authority to make executive changes, if necessary.
They must be skilled in Sharia-compliant banking or be permitted to hire experts in this field.