The landscape of Shariah-compliant finance in Bangladesh is set for a seismic shift following the Central Bank’s finalisation of a grand merger scheme. In an ambitious move to sanitise the balance sheets of the Islamic banking sector, five prominent institutions—First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, and EXIM Bank—will be absorbed into a newly minted flagship named the Combined Islamic Bank. The “Resolution Scheme” released by the regulator provides a definitive roadmap for the new bank’s capitalisation and the future of institutional deposits.
According to the newly approved policy, the Combined Islamic Bank will operate with an authorised capital of 40,000 crore BDT and a robust paid-up capital of 35,000 crore BDT. To ensure the entity’s immediate viability, the government has already committed a primary capital injection of 20,000 crore BDT, establishing the state as the “Class A” shareholder. The remaining capital requirements will be met through a mandatory debt-to-equity swap, where the fixed deposits of various institutional bodies will be converted into ownership stakes.
Capital and Shareholding Distribution
The restructuring framework categorises shareholders into three distinct tiers based on the nature of their contribution to the bank’s capital:
| Share Category | Stakeholder Group | Amount (Crore BDT) |
| Class A | Government of Bangladesh | 20,000 |
| Class B | Banks and Financial Institutions | 7,500 |
| Class C | Non-Financial Institutional Depositors | 7,500 |
| Total | Consolidated Paid-up Capital | 35,000 |
This mandatory conversion means that 7,500 crore BDT in fixed deposits held by other banks and financial institutions will be transformed into “Class B” shares. Similarly, 7,500 crore BDT from other corporate institutional depositors will be reclassified as “Class C” equity. This mechanism essentially bolsters the bank’s capital adequacy by reducing its liabilities to large depositors, turning them instead into long-term investors.
Protection for Sensitive Funds
Despite the wide-reaching nature of the conversion, the Central Bank has implemented a “protectionist” clause for socially significant and sensitive funds. The mandatory share conversion will not be applicable to:
Educational and religious institutions.
Hospitals and medical facilities.
Employee Provident Funds and Gratuity schemes.
Joint venture and multinational companies.
Foreign embassies and diplomatic missions.
This strategic exemption ensures that the liquidity of essential social services and employee retirement benefits remains unaffected by the merger. The Central Bank of Bangladesh has asserted that its authority remains absolute in the event of any shifting circumstances or disputes regarding shareholding. By consolidating these five entities into one powerhouse, the regulator hopes to create a “Combined Islamic Bank” capable of weathering future economic storms and restoring the integrity of Shariah-based banking in the country.