Bangladesh Bank has released Tk5,000 crore to facilitate the repayment of deposits to customers of Combined Islamic Bank, following a strong response to the bank’s deposit withdrawal process. Around 75,000 customers have already submitted applications seeking the return of their deposits, with the total amount requested standing at approximately Tk3,925 crore.
The bank began accepting applications for deposit repayments on 1 September. After receiving applications over six days, Bangladesh Bank released the Tk5,000 crore fund on Sunday, 6 September. Following verification and scrutiny of the applications, payments to eligible customers are expected to begin from Monday.
Combined Islamic Bank was formed through the merger of five Shariah-based banks — EXIM Bank, Social Islami Bank, First Security Islami Bank, Global Islami Bank and Union Bank.
The merger followed years of financial difficulties at the five institutions. During the previous Awami League government, EXIM Bank was under the control of Nazrul Islam Mazumder, former chairman of the Bangladesh Association of Banks. The other four banks were controlled by S Alam Group chairman Saiful Alam, according to the report.
The banks faced allegations of irregularities and the diversion of funds through loans. These developments weakened their financial position and eventually created difficulties for depositors seeking to withdraw their money.
The interim government subsequently merged the five Shariah-based banks and established Combined Islamic Bank as part of efforts to address the institutions’ financial problems and protect depositors.
The newly formed bank has paid-up capital of Tk35,000 crore. Of this amount, the government has provided Tk20,000 crore, while the remaining Tk15,000 crore is intended to be allocated as shares to depositors. A further Tk12,000 crore has been earmarked from the deposit insurance fund to facilitate repayment of up to Tk2 lakh to individual depositors. Bangladesh Bank has also announced a scheme for the gradual repayment of deposits in full.
No haircut on principal deposits
The repayment process gained momentum after the Bangladesh Bank governor announced on 25 August that no ‘haircut’ would be imposed on deposits held with Combined Islamic Bank.
Under the arrangement, individual depositors have been allowed to withdraw their principal deposits according to their requirements from 1 September. Customers have had to submit applications through the designated process at the relevant branches or sub-branches.
The bank has already received the necessary funds from Bangladesh Bank to make the repayments, according to banking sources.
The rules distinguish between the principal amount and profit earned on deposits. Customers can withdraw money held in current and savings accounts, as well as the principal amount of term deposits. However, profits accrued or payable against those deposits cannot be withdrawn at this stage.
A customer who withdraws the principal amount in full will be regarded as having reached a final settlement of that deposit. If the customer has any outstanding loan or other liability with the transferring bank, the relevant amount will be adjusted against the deposit before repayment.
Customers who choose not to withdraw their money immediately and keep their accounts active will remain eligible for profit at the applicable rate under the terms of their agreements. In the case of a term deposit withdrawn before maturity, the principal will be available, but no profit will be paid on the prematurely withdrawn amount. If a customer makes a partial withdrawal, the remaining balance may continue to earn profit according to the applicable rules.
Bangladesh Bank Executive Director and spokesperson Arif Hossain Khan said preparations had been completed to repay depositors. He said customers would receive their money in accordance with the commitments made regarding the bank and urged depositors not to panic.
Customers urged to avoid unnecessary crowds
Bangladesh Bank has also urged depositors to avoid creating excessive crowds at branches during the withdrawal process. Customers who do not need money immediately have been advised not to rush to branches on the first day and instead withdraw their funds gradually.
The central bank warned that if a large number of customers arrive at branches simultaneously, normal banking operations could be disrupted. A phased approach would therefore allow the bank to verify applications and process payments in an orderly manner.
The scale of applications submitted within just six days indicates the significant demand among depositors for access to their funds. With Tk5,000 crore now released against applications seeking about Tk3,925 crore, the immediate funding requirement has been covered, subject to the verification of individual claims and compliance with the repayment conditions.
