BB provides Tk 5,000 crore overdraft to Sammilito Islami Bank

Bangladesh Bank has extended an overdraft of Tk 5,000 crore to Sammilito Islami Bank to facilitate the return of deposits to customers of the five merged banks, with disbursements beginning Monday.

By Sunday, approximately 75,000 customers of the five banks had submitted applications seeking to withdraw a total of Tk 3,925 crore. Applications began being accepted on September 1.

The five distressed banks—Exim Bank, Social Islami Bank, First Security Islami Bank, Global Islami Bank and Union Bank—were merged under the interim government after prolonged failures to repay depositors’ funds, attributed to various irregularities by their directors. 

Under the previous Awami League government, Exim Bank was controlled by Nazrul Islam Majumder, former chairman of the Bangladesh Association of Banks (BAB). The other four banks were under the control of Chittagong-based businessman Saiful Alam Masud.

According to Bangladesh Bank data, the central bank had earlier provided Tk 4,784 crore to these banks at different times, including interest, the outstanding amount now stands at around Tk 5,200 crore. 

The additional Tk 5,000 crore has been released to help restore depositor confidence and support broader stability in the banking sector, taking potential inflationary effects into account.

Bangladesh Bank spokesperson and Executive Director Arif Hossain Khan said all preparations are in place to repay depositors. “As promised, the depositors of Sammilito Islami Bank will get their money back. There is no reason for customers to panic,” he stated.

The paid-up capital of the newly formed Sammilito Islami Bank is Tk 3,500 crore, of which the government has contributed Tk 2,000 crore. The remaining Tk 1,500 crore will be raised through participation by depositors. Separately, up to Tk 2 lakh per depositor is being returned using Tk 1,200 crore from the deposit insurance fund. The central bank has outlined a phased repayment scheme; beyond that scheme, funds are being released upon individual applications.

On August 25, Bangladesh Bank announced there would be no “haircut” on deposits of Sammilito Islami Bank customers. Individual depositors were told they could withdraw the principal amount of their deposits as needed from September 1. Customers must apply at the relevant branch or sub-branch; after verification, the due amount is paid.

Under Bangladesh Bank instructions, individual depositors may withdraw funds from current and savings accounts as well as the principal of term deposits. Profit already earned or due on the deposits will not be paid under this facility. Withdrawal of the principal of a term deposit will be treated as full and final settlement of that deposit. 

“If the account remains open, profit will continue to be paid at the applicable rate as per the original agreement.”