Bank mergers to continue, governor advises alternative steps to recover defaulted loans

Bangladesh Bank Governor Mostaqur Rahman has said that the ongoing initiative to merge banks will continue.

He also stated that all available alternative measures must be utilised to recover defaulted loans of these banks. At the same time, efforts should be made—within regulatory frameworks—to reopen closed factories of borrowers.

Governor Mostaqur Rahman delivered this message at a meeting with the administrators of five banks currently undergoing the merger process.

The meeting was held today, Tuesday at the Bangladesh Bank. All five administrators are officials of Bangladesh Bank and are currently overseeing the operations of the respective banks.

Mostaqur Rahman assumed office as the new governor last Thursday. The previous governor, Ahsan H Mansur, was removed from the position the day before.

After the fall of the Awami League government, Ahsan H Mansur had taken several reform initiatives, including the merger of weak banks.

Following the change in government and central bank leadership, questions had arisen about the future of those reforms.

In this context, the new governor has affirmed that the reform process will continue.

Sources at the meeting said the new governor was briefed on the reasons and procedures for the mergers.

He then stated that the reform efforts would remain ongoing. Initiatives must be taken to increase deposits. All available alternative measures must be adopted to recover defaulted loans.

Closed factories with outstanding bank loans should be reopened in compliance with regulations to boost employment. Overall, steps should also be taken to expand business activities. It was also announced that managing directors (MDs) will soon be appointed to the merged bank.

It is learned that during the Awami League government’s tenure, Islamic banks were the most severely affected by large-scale irregularities.

Some conventional banks also experienced major loan-related irregularities, resulting in most of their loans becoming defaulted.

The banks being merged are Union Bank Limited, First Security Islami Bank Limited, Global Islami Bank Limited, Social Islami Bank Limited, and EXIM Bank Limited.

These five banks have been consolidated to form Combined Islami Bank. To implement the process, Bangladesh Bank appointed administrators to each of the five banks. Currently, Bangladesh Bank officials are running their operations.

EXIM Bank had been under the control of Nazrul Islam Mazumder, former chairman of the Bangladesh Association of Banks (BAB), while the other four banks were controlled by Saiful Alam, chairman of the S Alam Group in Chattogram.

Both individuals are known to have been close to ousted Prime Minister Sheikh Hasina.

The new bank’s head office has been opened at Sena Kalyan Bhaban in Motijheel, Dhaka. The government has already appointed a chairman and board of directors for the bank.