Bangladesh Bank backtracks on no-profit call for merged banks’ depositors

The move comes a week after protests by depositors forced branch closures in parts of Dhaka and Cumilla

Bangladesh Bank has reversed its earlier decision and approved profit payments for depositors of five merged banks following criticism and protests.

The central bank conveyed the decision to the administrators of the banks through official letters.

On Thursday, Bangladesh Bank spokesperson Arief Hossain Khan told bdnews24.com that depositors would receive profits for the 2024–25 financial year.

“The previous decision has been reviewed and changed,” he said.

He noted that administrators have been instructed to pay profit at a 4 percent rate for a period of two years.

The regulatory about-face follows a contentious order issued on Jan 15, which had declared a total freeze on profits.

At that time, the central bank argued that as the banks had incurred losses, no returns could be distributed for 2024 and 2025.

This move was framed as a "haircut" on deposits, with the regulator citing international resolution protocols and Shariah principles which dictate that losses must be shared when profits are absent.

The lenders involved in this transition -- EXIM Bank, First Security Islami Bank, Global Islami Bank, Union Bank, and Social Islami Bank -- were earmarked for merger after being crippled by a severe financial crisis.

To facilitate this, the interim government granted a final licence on Dec 1, 2025, to form “Sammilito Islami Bank”, a state-owned entity.

Of its total paid-up capital of Tk 350 billion, the government contributed Tk 200 billion.

The earlier letters had explained that profit would not be paid to ensure balanced implementation of the resolution scheme.

Deposits were to be recalculated based on their status as of Dec 28, 2025, with no profit or gains to be considered for the period Jan 1, 2024 to Dec 28, 2025.

This effectively applied a “haircut”, reducing a portion of the deposits to determine the final balance.

The suspension sparked protests at the branch level, with depositors demonstrating against the decision.

Branch managers at First Security Islami Bank’s Tongi branch in Dhaka and Dhorkara Bazar branch in Cumilla submitted letters to the head office following closures.

In response to the demonstrations, Bangladesh Bank revoked its earlier decision a week later, restoring profit for the depositors.