Islamic Banks to be merged into two major entities: BB Governor

Bangladesh Bank (BB) Governor Dr Ahsan H Mansur has announced plans to consolidate the country’s Islamic banks into two large entities as part of a broader reform agenda to strengthen the banking sector. 

He made the statement while speaking as the chief guest at the inaugural session of Annual Banking Conference organized by Bangladesh Institute of Bank Management (BIBM) on Wednesday.

Governor Mansur emphasized that many Islamic banks are currently facing structural and operational issues. “There are a few large and many small Islamic banks, some of which are deeply troubled. These will be restructured and merged to form two major Islamic banks. Proper legal and supervisory frameworks will be introduced, following international best practices,” he said.

He also addressed ongoing efforts to recover laundered money, noting that cooperation with international agencies is underway. “Legal and ethical measures must be taken. We will make life difficult for those who have laundered money so that no one dares to do it again,” he stated, calling for support from all stakeholders.

Referring to recent regulatory actions, the governor said the boards of several banks have been reshuffled to protect the interests of depositors. “We have already changed the boards of 11 banks, followed by two more, and one bank has voluntarily made changes. Amendments are being made to the Bank Companies Act to define eligibility for board members and independent directors.”

Governor Mansur acknowledged that the central bank itself bears some responsibility for the challenges in the banking sector. “Bangladesh Bank is being strengthened. We are working to increase autonomy and oversight so the central bank can function effectively. There is pressure on the central bank and a dual control structure in the banking sector, which must be resolved,” he said.

He added that surveillance will be enhanced to ensure that bank boards and managements fulfill their responsibilities, although the central bank will not interfere in daily operations. “Central Bank reporting will be fully automated, and all submissions will be done online,” he said.

On the broader challenges, Governor Mansur noted that most troubled banks are suffering from capital shortfalls and will require several years to recover. “Sustainable reform of the banking sector requires political will, regardless of changes in government. The autonomy of the central bank must be preserved,” he stressed.

The conference was chaired by BIBM Director General Md. Akhtaruzzaman, and the keynote paper was presented by Grameen Bank Chairman and North South University Vice-Chancellor Professor Abdul Hannan Chowdhury.