Bangladesh Bank will move to merge struggling Shariah-based Islamic banks with stronger institutions that maintain functional boards and regulatory compliance, Governor Ahsan H Mansur said on Wednesday.
Addressing the 10th Annual Banking Conference in Dhaka, Mansur stated that while large Islamic banks had been restructured, several smaller institutions remained mired in operational and governance issues. “We’re reviewing every weak bank for a merger,” he said. “If a bank’s board is not functioning, the central bank has the right to intervene on behalf of depositors.”
Describing the merger process as ongoing, Mansur said Bangladesh Bank had already formed new boards at 11 banks in the first phase and reconstituted boards at two more banks in recent weeks. He added that at least one bank has since amended its internal rules under pressure from the central bank.
The central bank is also working to develop a regulatory framework tailored for Islamic banking, drawing from global practices. “We don’t yet have proper regulation for Islamic banks. We’re looking at how Islamic banking operates elsewhere,” Mansur said.
The governor emphasized that reforms remain incomplete but are progressing. “We want to reinforce the banking system in Bangladesh,” he said, adding that efforts are underway to curb illicit fund transfers abroad.
Mansur noted that the Bank Company Act is being amended to improve governance, including defining board member qualifications and setting limits on independent directors that are aligned with international standards. Bangladesh Bank, he said, would continue to monitor banks without interfering in daily operations.
