Merging 5 lenders, new Islami bank launches this month

Sammilito Islami Bank, a new Shariah-based state-run bank that will be formed through the merger of five troubled banks, is set to launch this month, said Bangladesh Bank Governor Ahsan H Mansur.

"We are keeping the Letter of Intent ready -- it will be issued as soon as the application is submitted," he told The Daily Star on October 30.

Once the new bank is launched, depositors will get a maximum of Tk 2 lakh from the deposit insurance fund.

The development comes after the finance ministry and the BB put in all-out effort to establish the new lender for the interest of depositors of the five troubled banks: First Security Islami, Union, Global Islami, Social Islami and EXIM, The Daily Star has learnt from people involved with the proceedings.

Despite state ownership, the bank will function in a competitive banking environment, Mansur said, adding that the government will remain a temporary owner.

"It will be the bank with the highest capital base," he said.

The authorised capital of the bank will be Tk 40,000 crore (each share of Tk 10, totalling 4,000 crore shares).

However, the paid-up capital of the bank will be Tk 35,000 crore.

Of this, Tk 20,000 crore will be provided by the government, designated as Class-A shareholders, according to the draft notification of the finance ministry.

Another Tk 7,500 crore will come from the permanent deposits of other depositors in the transferring banks and financial institutions, converted specially. They will be designated as Class-B shareholders.

The remaining Tk 7,500 crore will come from the deposits of other institutional depositors, excluding banks, financial institutions and multinational companies, converted specially. They will be designated as Class-C shareholders.

Finance ministry officials said that they had already prepared the application and relevant documents for the bank's licence, which were sent to the law ministry for vetting last week.

Once the vetting is completed, they will be forwarded to the BB, they said.

After forming the new bank, depositors will primarily get their funds.

As part of the move, the central bank has drawn up a detailed roadmap outlining specific timelines for the repayment process.

This will be announced soon through an official gazette, with the repayment schedule taking effect from the date mentioned in it. A draft of that gazette has already been prepared.

Savings of up to Tk 2 lakh, which will be treated as protected deposits, will require no wait and will be paid immediately after the merger.

The repayment schedule for individual depositors will be divided into two categories, according to the draft of the official circular.

Depositor repayments will get the highest priority as public confidence in the banking sector depends on it.

On the other hand, the BB has finalised five proposed names as administrators for the Shariah-based banks that are under consideration for a merger.

The banking regulator is likely to send administrators to those banks this week.

As part of the move, Mansur invited the managing directors and chairmen of the five banks today.