Depositors of merging banks will get back principal in 2 years: governor

Depositors of five merging banks will receive their full principal amounts back within the next two years, Bangladesh Bank Governor Ahsan H Mansur said today.

"They will receive their full deposits within the next two years. They need to have patience," he said at an emergency press briefing held at the Bangladesh Bank headquarters in Dhaka.

However, they will not receive any profit for 2024 and 2025 as the lenders have incurred losses.

“The decision was taken in line with Shariah principles. According to the Shariah Council, when there is a loss, no profit can be distributed,” he added.

On January 14, the central bank sent letters to each of the five banks, stating that deposit balances would be recalculated based on their position as of December 28, 2025, while no profit would be considered on deposits for the period from January 1, 2024, to December 28, 2025.

The five banks—First Security Islami, Social Islami, Union, Global Islami, and EXIM—are in the process of merging into a new state-run financial institution, Sammilito Islami Bank PLC.

It was previously decided that profits on deposits would be paid at the bank rate, which currently stands at 4 percent.

The banking regulator also said that a haircut on deposits would be applied in accordance with the approved decision, and the final balances of depositors would be determined after the completion of the recalculation.

The term “haircut on deposits” refers to a reduction in the value of a bank deposit in situations of a severe banking crisis or debt restructuring.

On December 30 last year, Bangladesh Bank introduced a comprehensive Bank Resolution Scheme, outlining priority access to deposits at the five merging Shariah-based banks and the mechanism for refunding the remaining funds over time.