Bangladesh Bank has released Tk5,000 crore to facilitate the repayment of deposits to customers of Sammilito Islami Bank, with around 75,000 depositors having already applied to withdraw their funds. The total amount sought through the applications stands at approximately Tk3,925 crore.
The repayment process began on 1 September, when the bank started accepting applications from depositors seeking the return of their principal deposits. After applications were submitted over six days, Bangladesh Bank released the Tk5,000 crore allocation for Sammilito Islami Bank on Sunday, 6 September. Following verification and scrutiny of applications, payments are expected to begin from Monday.
Sammilito Islami Bank was formed through the merger of five Shariah-based banks — EXIM Bank, Social Islami Bank, First Security Islami Bank, Global Islami Bank and Union Bank.
The five institutions had faced significant financial difficulties in recent years. During the previous Awami League government, EXIM Bank was under the control of Nazrul Islam Mazumder, a former chairman of the Bangladesh Association of Banks, while the other four banks were controlled by S Alam Group chairman Saiful Alam, whose business interests were based in Chattogram.
The banks faced allegations of irregularities and the withdrawal of funds through loans. Their financial positions subsequently weakened, making it increasingly difficult to meet depositors’ demands for withdrawals.
Against this backdrop, the interim government merged the five Shariah-based banks last year to create Sammilito Islami Bank, with the aim of addressing their financial difficulties and providing a framework for protecting depositors.
The newly formed bank has a paid-up capital of Tk35,000 crore. Of this amount, Tk20,000 crore has been provided by the government, while the remaining Tk15,000 crore is intended to be converted into shares for depositors. In addition, Tk12,000 crore has been allocated from the deposit insurance fund to facilitate the repayment of up to Tk2 lakh to individual depositors.
Bangladesh Bank has also announced a phased scheme for returning the remaining deposits over time.
No haircut on principal deposits
Depositors have been assured that no haircut will be imposed on their deposits. On 25 August, the Bangladesh Bank governor announced that depositors of Sammilito Islami Bank would not face any reduction in their principal amount.
From 1 September, individual depositors were allowed to apply for withdrawal of their principal deposits according to their requirements. Applications have to be submitted through the relevant branches or sub-branches, after which the bank will verify the information before processing payments.
Bank officials said the necessary funds for making the payments have already been received from Bangladesh Bank.
Principal can be withdrawn, but not profit
Under the central bank’s instructions, individual depositors can withdraw funds held in current and savings accounts, as well as the principal amount of fixed-term deposits. However, accrued or payable profit on those deposits cannot currently be withdrawn.
A depositor who withdraws the entire principal amount will be regarded as having made a full and final settlement of that deposit. If the customer has any outstanding loan or other liability with the relevant transferring bank, the amount due may be adjusted against the deposit before repayment.
Depositors who choose not to withdraw their funds immediately and keep their accounts active will remain eligible to receive profit at the applicable rate under the terms of their agreements.
For fixed-term deposits, withdrawing the principal before the agreed maturity date will allow the customer to receive the principal but not profit on that amount. Customers who withdraw only part of their deposits, meanwhile, may continue to receive applicable profit on the remaining balance, subject to the relevant rules.
Bangladesh Bank Executive Director and spokesperson Arif Hossain Khan said preparations had been completed to repay depositors. He said the bank would fulfil its commitment to return depositors’ funds and urged customers not to panic.
Customers urged to avoid unnecessary queues
Bangladesh Bank has also urged depositors to avoid creating unnecessary crowds at branches during the withdrawal process. Customers who do not have an immediate need for cash have been advised not to rush to branches on the first day and instead withdraw their funds gradually.
The central bank said a large number of customers arriving at branches simultaneously could disrupt normal banking operations. Depositors have therefore been asked to remain patient and use the repayment facility in phases.
The release of Tk5,000 crore is intended to provide sufficient liquidity for the initial repayment process, while the volume of applications shows the scale of demand among depositors. With around 75,000 applications representing claims of roughly Tk3,925 crore, the immediate focus will now be on verifying applications and ensuring that repayments are made in an orderly manner.
