Owners fear revised law may allow former bank ‘looters’ to regain control of troubled banks

Bankers’ association expresses concern that revised rules could destabilise weak banks

The Bangladesh Association of Banks (BAB), representing private bank entrepreneurs, has expressed fresh concern over recent amendments to the bank resolution framework that allow former shareholders of merged weak banks to return under certain conditions.

The issue was raised during a meeting with Bangladesh Bank Governor Mostaqur Rahman on Monday, where BAB leaders outlined what they described as deepening uncertainty in the banking sector.

After the meeting, BAB Chairman Abdul Hai Sarkar said the revised framework had created unease among bankers.

“There is a complication in the banking resolution framework. We are a bit worried. If the previous people come back, things could turn chaotic,” he said.

“That will not be good for the country. Ordinary people already know who damaged the banks.”

Five financially distressed private banks -- Exim Bank, First Security Islami Bank, Global Islami Bank, Union Bank and Social Islami Bank -- were merged in December to form Sammilito Islami Bank after prolonged financial instability.

Following the formation of a new BNP government in February, Mostaqur took charge as central bank governor.

In April, the Bank Resolution Ordinance was converted into the “Bank Resolution Act 2026”, during which Section 18A was introduced, allowing former shareholders to repurchase stakes under specific conditions.

The move has sparked concerns that previously controversial business groups could regain control of troubled banks.

Sarkar said funds allegedly looted from banks had already been siphoned abroad.

“This is something the government should look into. Those who took money have already looted and fled. If they are brought back, it will create serious problems and the entire sector will be affected,” he said.

He added that the issue was widely known among the public and would not be beneficial for the country.

Asked about the governor’s response, Sarkar said he had listened carefully and assured that steps would be taken.

BAB Vice-Chairman and UCB Bank Chairman Sharif Zahir also attended the meeting, saying the conditions attached to the resolution law may be difficult to fulfil in practice.

“They may not have the capacity to meet those requirements,” he said.

The delegation also urged caution in policy formulation, stressing that stakeholders should be consulted to avoid unintended consequences.

Separately, BAB raised concerns over liquidity stress in the sector, high default loans, weak private investment growth and declining confidence.

It submitted a 15-point recommendation list, including incentive support for bank employees, guarantees for lending to closed industries, and tax relief measures.

The organisation also called for the creation of an asset management company for defaulted loans, refinancing support for SME and agriculture sectors, and broader consultation on banking law reforms.

It warned that without coordinated policy support from regulators, government and banks, the sector could face prolonged instability.