The central bank has dissolved the boards of directors of five financially troubled Sharia-compliant banks to merge them. At the same time, the banks have been declared ineffective.

This decision has been taken based on the proposal of Bangladesh Bank and the recommendation of the Financial Institutions Department.

The banks are: First Security Islami Bank PLC, Global Islami Bank PLC, Union Bank PLC, Exim Bank PLC and Social Islami Bank PLC.

Bangladesh Bank sent a letter to the banks in this regard on Wednesday (November 5). The banks confirmed this information to Dhaka Post.

Separate letters said that the boards of directors of the banks have suspended their activities from November 5. At the same time, the banks will be operated under the Bank Resolution Ordinance.

Central bank officials said that a new government-owned Islamic bank will be formed through merger. It will be called ‘Sammilit Islami Bank’. As part of this process, the board of directors was dissolved today.

Meanwhile, the governor has summoned the chairmen and managing directors of the banks urgently on Wednesday. It is learnt that they will be formally informed of the issues in the meeting. However, the company secretaries of the banks have already been informed of the issues.

It is reported that the Governor of Bangladesh Bank will officially inform journalists about this information at 4 pm today.

Earlier, on October 9, the Advisory Council approved the formation of a government-owned Islamic bank. The decision was made based on the proposal of Bangladesh Bank and the recommendation of the Financial Institutions Department.

The financial condition of these banks has been deteriorating continuously for more than a year. According to Bangladesh Bank data, the banks have practically reached a state of bankruptcy due to liquidity crisis, huge amounts of classified loans, provision shortfall and capital shortage. Despite providing liquidity support several times, the condition of these banks has not improved. On the contrary, their stock market value has fallen drastically and the net asset value (NAV) of each bank is in a negative state.