Bangladesh Bank Introduces New Resolution Scheme
Today, Bangladesh Bank (BB) announced a detailed resolution scheme aimed at determining how deposits from five merging Sharia-based banks will be handled, including who will have priority access to those funds and the timeline for refunds.
This new framework will also impact the employees of the merging banks, potentially altering their working conditions and benefits.
The scheme prioritizes retail depositors, ensuring that individuals with balances up to Taka 200,000 are fully protected and can withdraw their money at any time after the scheme goes into effect.
Additionally, certain vulnerable groups are given special consideration. For instance, depositors undergoing cancer treatment or kidney dialysis will face no withdrawal restrictions, regardless of how much money they have deposited.
Following retail depositors, various institutions are next in line. Educational and religious organizations, hospitals, employee reserves and gratuities, joint ventures, multinational corporations, banks in bankruptcy resolution, and foreign embassies will be able to resume normal transactions gradually.
However, those with deposits exceeding Tk 200,000 won’t be able to access their entire balance immediately. After taking out the first Tk 200,000, the remaining amount will be released in installments of Tk 100,000 every three months, meaning that full access could take up to two years, depending on the total deposit size.
The scheme includes provisions for automatic renewal of term deposits upon maturity. For example, a three-month deposit will renew three times, while one- to two-year term deposits will be transitioned into three-year term deposits.
In some situations, the offered interest rate may be one percentage point below the bank rate, which could be less than the original rate provided by the bank.
Different rules apply to institutional deposits held by banks and financial institutions. Fixed deposits amounting to around Tk750 billion will be converted into class B shares of Samirit Islamic Bank PLC, which is being established through the merger of the five failed banks.
Additionally, some deposits from other institutions may be converted into stocks, potentially yielding dividends in the future.
Impact on Employees
This resolution scheme will significantly affect workers at the merging banks—Export-Import Bank, First Security Islamic Bank, Global Islamic Bank, Social Islamic Bank, and Union Bank—as they are transitioned to Samrit Islamic Bank.
The governing board has the authority to alter working conditions or reduce benefits, and employees cannot contest these changes.
If they choose to leave, employees can resign and receive their full benefits according to existing regulations. However, those found guilty of misconduct are subject to termination without further explanation.
The scheme also clarifies the roles and responsibilities of Bangladesh Bank, the government, and other relevant agencies involved in the resolution process. It aims to structure decision-making with a focus on transparency and accountability while addressing the issues within failed banks.
The plan alleges that these five banks were involved in extensive misconduct, including fraud, and that their previous management failed to uphold proper governance standards.
Despite receiving liquidity support from the central bank for over a year, the financial situation of these banks worsened, leading Bangladesh Bank to classify them as non-viable under the Bank Insolvency Ordinance 2025 and appoint an administrator.
