Published: 01:09 AM, 13 May 2026
BAB fears return of former owners to banking sector
The Bangladesh Association of Banks (BAB), the organization representing private bank owners, has expressed fresh concerns over recent amendments to the banking resolution law that could allow former shareholders to regain control of merged banks.
BAB leaders met with Bangladesh Bank Governor Mostakur Rahman on Monday at the central bank headquarters to discuss the issue.
Speaking to reporters after the meeting, BAB Chairman Abdul Hai Sarker said the organization was “worried” about certain aspects of the banking resolution framework.
“There is a complication in the banking regulation framework, and frankly, we are concerned about it,” he said. When asked why BAB was alarmed, he replied, “We fear that if the previous people return, things may once again go out of control. That would not be good for the country. Ordinary people in Bangladesh already know who was responsible for damaging the banking sector.”
Last December, five crisis-hit Shariah-based private banks — EXIM Bank, First Security Islami Bank, Global Islami Bank, Union Bank, and Social Islami Bank — were merged to form the state-owned Islamic bank Sommilito Islami Bank under the interim government’s Banking Resolution Ordinance, 2025. However, while converting the ordinance into the “Bank Resolution Act, 2026” in Parliament last April, a new Section 18(A) was added, allowing former shareholders to repurchase shares under certain conditions.
The amendment has sparked fears that controversial business groups could eventually regain influence over the banking sector. Referring to large-scale financial irregularities and alleged money laundering, Abdul Hai Sarker said, “Those who took money out of the banks looted and siphoned it abroad. Bringing them back could create enormous problems. The entire sector would be seriously affected. The issue of bank looting has already become public knowledge, and that is not healthy for the country.”
Asked whether the governor responded to BAB’s concerns, he said, “He listened to us very attentively and patiently. The governor said that actions are being taken.”
BAB Vice Chairman and Chairman of United Commercial Bank PLC, Sharif Zahir, added that the conditions set under the law would likely be difficult for former owners to fulfill. “The governor believes it will not be easy for them to meet those conditions and return,” he said. BAB leaders emphasized that while lawmaking remains the government’s responsibility, policymakers should consult stakeholders before implementing major reforms in the banking sector.
“There are many stakeholders involved. Policies become easier to implement when discussions are held with them,” Abdul Hai Sarker said. “If changes are made after a merger, complications may arise.”
During the meeting, BAB also discussed the government’s planned Tk 20,000 crore support package aimed at reviving closed industrial units. Responding to questions about whether banks could provide such financing, the BAB chairman noted that many factories had shut down for different reasons — including gas shortages, lack of buyers, or working capital shortages — and some could reopen if adequate financing were provided. According to a later press release issued by BAB, the meeting focused on the ongoing challenges facing the banking sector, including rising non-performing loans, provisioning deficits, capital adequacy pressure, sluggish private sector credit growth, and declining investor confidence.
BAB submitted a 15-point memorandum, urging coordinated policy support from the government, regulators, and banks to stabilize the sector. The association also requested continuation of employee incentive bonuses, arguing that incentives are essential for retaining skilled manpower, maintaining morale, and accelerating recovery efforts in struggling banks.
In addition, BAB urged the government or Bangladesh Bank to act as guarantor for fresh loans aimed at reviving sick or closed industries. According to the association, such guarantees would reduce risk for banks and help restore market confidence more quickly.
The memorandum further proposed forming a separate Asset Management Company (AMC) to manage defaulted loans, offering regulatory relief for rescheduled loans, providing tax incentives to preserve capital, and expanding refinancing facilities for SMEs and the agricultural sector.
BAB also called for broader consultations with banking stakeholders before finalizing amendments related to the Bank Company Act, banking resolution frameworks, board accountability, sponsor share structures, and capital-raising capabilities.
