Bangladesh Bank Moves to Merge Five Troubled Islamic Banks in Landmark Reform
Bangladesh Bank is set to merge five struggling Islamic banks into a single entity by November 2025, in an unprecedented step to stabilise the country’s financial sector. The central bank’s plan covers First Security Islami Bank, Social Islami Bank, Global Islami Bank, Union Bank, and EXIM Bank, all plagued by soaring default loans and governance concerns.
According to The Business Standard, the merger will create Bangladesh’s largest Islamic bank, with over 1,145 branches and assets totalling more than Tk2.19 trillion. The new entity will operate as a fully Shariah-compliant bank, with the government injecting Tk20,000 crore in fresh capital from the national budget to ensure its stability.
As part of the rescue, all five banks’ boards of directors will be dissolved. Bangladesh Bank will form a new board and oversee operations until a final governance structure is established.
The drastic move follows years of financial mismanagement, with S Alam Group, a major Chattogram-based conglomerate, and its affiliates accused of borrowing thousands of crores from these banks, contributing to massive loan defaults.
