75,000 Apply to Withdraw Tk 4,000 Crore; Bangladesh Bank Provides Tk 5,000 Crore to Five Merged Banks
Around 75,000 customers have applied to withdraw money from five merged banks, with their claims totalling Tk 3,925 crore. Bangladesh Bank provided Tk 5,000 crore on Sunday (September 6) to facilitate payments to customers of the five banks.
Payments to applicants are scheduled to begin on Monday. Applications have been accepted since September 1.
The five banks are EXIM Bank, Social Islami Bank, First Security Islami Bank, Global Islami Bank and Union Bank.
During the Awami League government, EXIM Bank was controlled by Nazrul Islam Mazumder, former chairman of the Bangladesh Association of Banks (BAB), while the other four were controlled by Saiful Alam, head of Chattogram-based S Alam Group and a prominent businessman.
During their control, the banks allegedly disbursed thousands of crores of taka in loans without adequate collateral through widespread irregularities. The resulting financial crisis left the banks unable to repay depositors. Against this backdrop, the interim government merged the five Shariah-based banks last year to form Sammilito Islami Bank.
The bank has paid-up capital of Tk 35,000 crore, of which the government has provided Tk 20,000 crore. The remaining Tk 15,000 crore will be issued to depositors as shares.
Separately, depositors of the banks are being repaid up to Tk 2 lakh through Tk 12,000 crore from the deposit insurance fund. Bangladesh Bank has announced a scheme for the phased repayment of the full amount.
On August 25, the governor announced that there would be no “haircut” on deposits held with Sammilito Islami Bank. It was also announced that individual depositors would be able to withdraw the principal amount of their deposits as needed from September 1. Following the announcement, Sammilito Islami Bank accepted applications from September 1 through Sunday.
According to bank sources, applications for deposit withdrawals were accepted under the prescribed rules. Customers had to apply at their respective branches or sub-branches. Their claims will be paid after verification of the applications. The central bank has already provided the necessary funds.
Under Bangladesh Bank’s instructions, individual depositors will be allowed to withdraw funds from current and savings accounts as well as the principal of fixed deposits. However, profits earned or payable on the deposits will not be available under this facility.
Once a customer withdraws the principal amount, the relevant deposit will be considered fully and finally settled. If the customer has any outstanding loan or liability with the transferring bank, it will be adjusted from the deposit amount before repayment.
Customers who do not withdraw their deposits immediately may continue to earn profits at the applicable rate under the terms of their agreements if they keep their accounts active. However, if a fixed deposit is encashed before maturity, the principal will be returned but no profit will be paid on that amount. Customers making partial withdrawals will remain eligible to earn profits on the remaining balance according to the applicable rules.
Bangladesh Bank Executive Director and spokesperson Arif Hossain Khan said all preparations have been completed to return customers’ deposits. Depositors of Sammilito Islami Bank will be paid as promised, and there is no reason for customers to panic.
Bangladesh Bank has urged depositors to avoid overcrowding and disorder at bank branches during withdrawals. Those who do not urgently need the money have been requested not to visit banks on the first day and instead come on subsequent days.
The central bank spokesperson said simultaneous visits by all customers to withdraw money could disrupt normal banking operations. He urged depositors to remain patient and withdraw their funds gradually.
