No payout for depositors despite Tk20,000 crore in the fund!

Bangla Press Desk:  There is no shortage of funds in the bank. However, due to the complexities of data migration, depositors are not currently able to withdraw cash. This is the situation at the newly formed United Islami Bank. Although Tk20,000 crore has already been deposited with Bangladesh Bank, the funds cannot yet be released because customer data from the five merged Islamic banks have not been fully transferred into a single database.

Those concerned say that until this technical process is completed, it would be risky to determine accurately how much money each customer is entitled to receive.

The bank’s chairman, Mohammad Ayub Mia, said that the data transfer work is progressing rapidly and is expected to be completed within December. He expressed hope that from January, funds could be returned to general depositors in phases. He added that the legal and IT departments are working together to ensure that no legal or accounting complications arise in the future.

At the same time, steps are being taken to strengthen the bank’s organisational structure. A circular has already been issued for the appointment of a Managing Director (MD), and efforts are underway under the supervision of the Ministry of Finance to find a suitable candidate. The appointment is expected to be finalised soon. The chairman also expressed optimism that the bank will be able to begin full operations from January.

Alongside data migration, work is also underway to restructure the banking framework. Preparations are being made to close old accounts held with Bangladesh Bank and to open several new current accounts in the name of the merged bank, such as United Islamic Bank Exim and United Islamic Bank Union. However, a source of reassurance for depositors is that they will not need to open any new accounts and will be able to withdraw money using their existing cheques.

According to preliminary estimates by Bangladesh Bank, the total cost of repaying depositors will be around Tk12,000 crore. The paid-up capital of the newly formed United Islamic Bank has been set at Tk35,000 crore, of which the government will provide Tk20,000 crore and Tk15,000 crore will come from the deposit insurance fund.

The bank’s authorised capital has been fixed at Tk40,000 crore. The government’s share of Tk20,000 crore has already been released, and the remaining amount will be added to capital in phases.

Measures to strengthen the foundation of the new bank include appointing skilled, experienced and honest officials at the top level, including the Managing Director; upgrading operational policies to international standards; and rebuilding customer confidence. The bank’s head office has already been inaugurated at Sena Kalyan Bhaban in Motijheel, Dhaka. The government has also appointed the chairman and the board of directors, which includes former and serving civil servants. There are plans to further strengthen the board in future through the appointment of independent directors.

Bangladesh Bank Executive Director and spokesperson Arif Hossain Khan said that depositors would receive their money as soon as the data transfer is completed. All existing customers will be treated as customers of the new United Islami Bank. He added that work on building the IT and HR structures is ongoing and that the central bank’s IT team will provide assistance if required.

Explaining why no specific date has been announced, the central bank spokesperson said that declaring a fixed date could lead to excessive crowds at all branches of the five banks at the same time, posing risks to law and order. For this reason, a phased repayment strategy has been adopted. He added, “Those who are in urgent need will withdraw their money. However, if funds are withdrawn unnecessarily simply to transfer them to other banks, the new bank will lose the opportunity to recover.”

According to Bangladesh Bank data, the five merged Islamic banks currently hold deposits totalling Tk142,000 crore from around 7.5 million depositors. In contrast, their total loan exposure is about Tk193,000 crore, a large portion of which has already become non-performing. In this context, the primary objective of the newly formed United Islami Bank will be to restore depositor confidence and bring stability back to the banking system.

Describing the launch of Islamic banking operations under government ownership as a positive development, the bank’s chairman Mohammad Ayub Mia said, “Our first and foremost priority is to keep depositors’ money safe and restore their confidence. Once the data transfer is complete, this waiting will come to an end; it is now only a matter of time.”

BP/SP