Capital Crunch Threatens Closure of Janata Bank’s UAE Operations

The overseas presence of state-owned Janata Bank faces a critical threat as its four branches in the United Arab Emirates (UAE) edge closer to permanent closure. The impending shutdown comes in the wake of a severe capital shortfall, which has triggered direct regulatory intervention from Middle Eastern financial authorities.

The Central Bank of the United Arab Emirates (CBUAE) has instructed Janata Bank to initiate preparations to systematically wind down its existing business operations across the federation. According to an investigative report published by The Business Standard, the Emirati regulator has imposed strict curbs on debit transactions from the bank’s corporate accounts and has ordered an immediate halt to the opening of new customer accounts.

Regulatory Non-Compliance and Capital Shortfalls

In official correspondence outlining the sanctions, the CBUAE cited two primary catalysts for its punitive action: the bank’s persistent failure to maintain mandatory paid-up capital requirements and the highly precarious financial health of Janata Bank’s broader operations back home in Bangladesh.

Ahmed Said Al Qamzi, the Assistant Governor of the CBUAE, issued a formal directive to Mohammad Kamruzzaman, the Chief Executive Officer of Janata Bank’s UAE operations. The communication instructed local management to immediately apprise the parent bank’s board of directors in Dhaka regarding the development, demanding an expedited resolution and a formal response detailing their next course of action.

Under the stringent regulatory framework enforced by the CBUAE, foreign banking institutions operating within the UAE are mandated to maintain a minimum paid-up capital of 400 million Dirhams (AED). Janata Bank’s current capital base in the region stands at a mere AED 100 million. This leaves a staggering deficit of AED 300 million—equivalent to approximately 10 billion Bangladeshi Taka based on current conversion rates.

Emirati authorities have clarified that failure to plug this substantial financial void will result in an immediate revocation of the bank’s operating licence, as undercapitalisation poses an unacceptable risk to local depositors. This regulatory ultimatum follows a prior restructuring effort in 2022, when Janata Bank received approval from Bangladesh Bank to increase its UAE capital from AED 75 million to AED 100 million. However, that injection has proven entirely insufficient against updated capital adequacy thresholds.

Crisis Management and Parental Reassurance

Following the receipt of the regulatory order, Kamruzzaman dispatched an urgent missive to the Dhaka headquarters, seeking immediate intervention from the board to chart a legal and financial strategy. The unfolding crisis was subsequently placed at the centre of intense deliberations during Janata Bank’s 884th board of directors meeting. Acknowledging the gravity of the situation, the board concluded that a coordinated diplomatic and financial effort—involving the Financial Institutions Division, Bangladesh Bank, the Ministry of Foreign Affairs, and top bank executives—is urgently required to avert an international exit.

Addressing the crisis, Mohammad Mujibur Rahman, the Managing Director of Janata Bank, confirmed that the institution has approached the Emirati central bank with a phased recapitalisation proposal.

“We have submitted a formal plan to the CBUAE to gradually elevate our paid-up capital to the required 400 million Dirhams over a three-year window,” Rahman stated. “Should the UAE authorities reject this phased approach, we intend to seek direct financial assistance from the Bangladeshi government to bridge the deficit immediately.”

When questioned about the CBUAE’s explicitly stated anxieties regarding Janata Bank’s domestic instability, Rahman acknowledged the systemic challenges gripping the South Asian nation’s banking sector, noting that a national non-performing loan (NPL) ratio hovering above 20 per cent naturally causes global concern. He admitted that Janata Bank’s domestic situation is particularly acute, with bad loans constituting a staggering 70 per cent of its total asset portfolio.

Despite these alarming metrics, the Managing Director maintained an optimistic outlook, highlighting that the institution continues to meet its Statutory Liquidity Ratio (SLR) requirements, service government letters of credit, disburse agricultural loans, and clear its monthly payroll of 1.25 billion Taka entirely through internal cash flows. Whilst the bank’s domestic operations struggle under the weight of historic default loans, executives remain hopeful that a diplomatic breakthrough will preserve their footprint in the Gulf.