Bangladesh Association of Banks (BAB), representing private bank entrepreneurs, has expressed grave concerns over recent legislative amendments that could allow former shareholders to regain ownership of merged banks.
Following a meeting with Bangladesh Bank Governor Mostaqur Rahman on Monday afternoon, BAB Chairman Abdul Hai Sarker told journalists that the new banking resolution framework has created a sense of “fear” within the sector.
Sarker warned that the return of individuals previously responsible for damaging the banking sector would lead to renewed irregularities and harm the country’s interests, noting that the public is well aware of those who have historically exploited these institutions.
Legislative shifts, ownership risks
The concerns centre on the Bank Resolution Act, 2026, which was passed by Parliament in April this year.
This legislation converted the previous Bank Resolution Ordinance, 2025 – issued by the interim government – into law, but reportedly added Section 18(a) during the process.
This new provision allows former shareholders to repurchase shares under certain conditions, which industry leaders fear could pave the way for controversial business groups to regain control of the banking sector.
Sarker asserted that money looted from banks has already been laundered abroad and argued that reinstating those responsible would create massive problems and seriously affect the sector’s stability.
He further noted that the BAB was not consulted regarding the inclusion of Section 18(a), despite the importance of involving stakeholders to ensure smooth policy implementation.
Governor’s response and merger context
The BAB delegation received a patient hearing from the Governor, who stated that action is being taken regarding their concerns.
BAB Vice-Chairman and Chairman of UCB Bank Sharif Zahir added that the Governor believes the conditions set for regaining ownership are so stringent that it is unlikely former owners will have the ability to fulfil them.
The backdrop to this conflict involves the merger of five crisis-hit Shariah-based banks – Exim Bank, First Security Islamic Bank, Global Islamic Bank, Union Bank, and Social Islami Bank – which were combined last December to form the state-owned Sammilito Islamic Bank PLC.
Following the formation of a BNP-led government in February, Mostakur Rahman was appointed as the Governor of the central bank.
Recommendations for sector stability
During the meeting, the BAB submitted a memorandum containing 15 recommendations to address the existing crisis in the banking sector, which is currently struggling with high non-performing loans (NPLs), provision shortfalls, and a lack of investor confidence.
The association emphasised the need for coordinated policy support between the government and the regulator to stabilise the industry. Key demands included the continuation of incentive bonuses for bank employees to maintain morale and retain skilled staff during recovery efforts.
The BAB also requested that the government or the central bank act as a guarantor for new loans intended to revive “sick” or closed industrial units.
This request coincides with the government’s plan to announce a Tk20,000 crore stimulus package for factories closed due to capital shortages, gas supply issues, or a lack of buyers.
The BAB argued that providing such guarantees would allow banks to avoid the core risks associated with lending to struggling industries, thereby restoring market confidence.
Other proposals included the formation of a separate Asset Management Company to manage NPLs, tax benefits for capital preservation, and the expansion of refinancing schemes for the agricultural and SME sectors.
The leadership also called for broader consultation with the banking community before finalising decisions on the Bank Company Act, board accountability, and entrepreneur share structures.
