A fierce protest erupted in the bustling commercial district of Khatunganj on Sunday morning as depositors of five banks expressed their outrage over the ongoing restrictions on transactions and the controversial “haircut” policy.
This unprecedented outburst paralyzed banking activities in the region, which serves as a crucial commercial hub for the city.
The protests began around 11:00am when angry customers locked the doors of the Union Bank Khatunganj branch, demanding the return of their hard-earned savings and an end to the decision that cuts their returns on deposits.
The protests quickly spread to other local branches, including those of First Security Islami Bank, Social Islami Bank (SIBL), and Global Islami Bank, creating a tense standoff.
Police interfered as depositors tried to lock First Security Islami Bank branch. Tensions peaked at Global Islami Bank, where protesters confined the branch manager inside the office, prompting a police intervention to restore order.
The authorities were able to remove the locks and bring the situation under control, but not before the protests had severely disrupted banking operations.
The core of the protesters’ anger lies in the ongoing restrictions on withdrawals, which have been in place for nearly two years.
The banks are currently unable to allow customers to access their full deposits due to an ongoing restructuring process overseen by Bangladesh Bank.
The most contentious issue, however, is the imposition of a “haircut” policy – a move that reduces the profit earned on deposits.
“We want our money back. We’ve been waiting for over a year and a half, but still, nothing has changed. Now they’re taking even more from us with this haircut policy,” said one of the agitated customers.
Many of those protesting claimed to be facing severe financial difficulties, unable to access their funds for essential expenses such as medical treatment and business operations.
The “haircut” policy, part of a broader bank restructuring plan for five financially struggling banks, has been imposed by the central bank to ease liabilities, which are expected to reduce by Tk 10,000 crore.
Under the plan, profit payouts for the years 2024 and 2025 will be withheld, affecting approximately 75 lakh depositors across the country. The decision, however, has only exacerbated the distrust among the banking public.
Local bank managers, including the head of First Security Islami Bank’s Khatunganj branch, said field-level employees have no authority to address such decisions, which are made by higher-ups in the central bank and policy-making bodies.
They expressed frustration over being caught in the middle of the growing crisis, unable to provide any solutions to the desperate customers.
Economists and financial experts are warning that the situation could have long-term repercussions for Bangladesh’s banking sector.
Professor SM Nasrul Kadir, of the Finance Department at Chittagong University, said, “While ‘haircuts’ are a common tool for restructuring in some countries, Bangladesh’s socio-economic context is vastly different.
The government must ensure that such measures do not harm depositors’ interests, which are the foundation of trust in the banking system.”
The ongoing turmoil in Khatunganj is not just a banking issue – it is rapidly turning into a crisis of public confidence.
With protests threatening to intensify and spread to other parts of the country, analysts fear that this issue could have a cascading effect on the nation’s broader financial stability.
HR experts and economic analysts suggest that, to alleviate the crisis, the government should take stronger measures against loan defaulters to prevent such pressures from falling on the depositors.
They also advocate for a dedicated protection framework for journalists and media workers, who are often at the forefront of exposing such financial irregularities.
