Bangladesh approves merger creating largest Islamic bank
Bangladesh forms unified Sharia-compliant bank through consolidation of five troubled lenders as Dhaka moves to stabilize Islamic finance sector
DHAKA, Bangladesh (MNTV) — Bangladesh has approved a landmark consolidation of five struggling Sharia-compliant banks into a single institution, marking the largest restructuring in the history of the country’s Islamic banking sector and signaling a decisive move to restore market confidence.
The newly formed Sammilita Islami Bank PLC received final authorization from the Bangladesh Bank during a special board session on Sunday. The unified bank is expected to begin full operations in early December, headquartered at Sena Kalyan Bhaban in Dhaka’s Motijheel financial district.
The merger absorbs First Security Islami Bank, Global Islami Bank, Social Islami Bank, EXIM Bank, and Union Bank, combining their assets, liabilities, branches, and deposit networks under a single management structure. The central bank has already opened designated accounts for the new entity and begun formal transition procedures.
The consolidated institution will launch with a paid-up capital of 350 billion Bangladeshi taka ($2.90 billion) and an authorized capital of 400 billion Bangladeshi taka ($3.30 billion) — the largest capital base ever held by a bank operating under Islamic principles in Bangladesh.
Officials said the government will contribute 200 billion Bangladeshi taka ($1.6 billion) , while the remaining 150 billion Bangladeshi taka ($1.2 billion) will come from depositors’ equity.
Economic observers say the move reflects an urgent effort to stabilize a sector weakened by liquidity shortages, governance failures, and rising default risks that have recently drawn public scrutiny.
By unifying the institutions, the central bank aims to improve financial discipline, strengthen risk management, and safeguard depositors through a more robust balance sheet.
Islamic banking — which prohibits interest and instead operates on asset-based financing, profit-sharing, and ethical investment rules — has grown rapidly across Muslim-majority economies.
In Bangladesh, more than 28 percent of total deposits and a significant share of remittance flows are now held in Sharia-compliant banks, and demand continues to increase among customers seeking religion-based financial services.
Analysts say the merger could serve as a model for restructuring troubled lenders across South Asia, where Islamic finance is expanding but regulatory capacity and transparency challenges persist.
They note that financial consolidation, if implemented effectively and with strict oversight, could help restore market reliability and protect banking stability at a time of global economic uncertainty.
The new bank is expected to focus initially on improving liquidity, digital service integration, and stronger governance frameworks before expanding product lines and regional partnerships.
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