Over the past six days, 75,000 customers of five merged banks have applied to withdraw their money, with claims totaling 3,925 crore taka. Bangladesh Bank disbursed 5,000 crore taka on Sunday to pay these customers. Applicants are due to start receiving their money from today, Monday.
The five banks in question are Exim Bank, Social Islami Bank, First Security Islami Bank, Global Islami Bank and Union Bank. During the Awami League government’s tenure, Exim Bank was controlled by Nazrul Islam Mazumder, former chairman of the Bangladesh Association of Banks (BAB), while the other four were controlled by Saiful Alam, the widely discussed businessman and head of Chattogram’s S Alam Group. Under their control, thousands of crores of taka were siphoned out of these banks through massive looting via unsecured loans. This created a financial crisis, leaving the banks unable to return depositors’ money. Amid this situation, the interim government merged these five Shariah-based banks last year to form “Sammilito Islami Bank.”
The bank’s paid-up capital has been set at 35,000 crore taka, of which the government has provided 20,000 crore taka. The remaining 15,000 crore taka will be given to depositors as shares. In addition, 12,000 crore taka from the deposit insurance fund is being used to refund up to 200,000 taka to depositors of these banks. The central bank has announced a scheme to refund the full amount in phases.
On Aug. 25, the governor announced there would be no “haircut” whatsoever on Sammilito Islami Bank depositors’ deposits. At the same time, it was announced that individual depositors would be able to withdraw the principal amount of their deposits as needed starting Sept. 1. Sammilito Islami Bank accepted customer applications from Sept. 1 through Sunday.
Bank sources said applications for deposit refunds were accepted according to set rules, with customers required to apply in person at the relevant branch or sub-branch. Their dues will be paid after the applications are verified. Funds have already been received from the central bank.
Principal can be withdrawn, not profit
Under Bangladesh Bank’s directive, individual depositors will be able to withdraw money from their current and savings accounts, as well as the principal amount of fixed deposits. However, this facility does not include any profit earned or due on the deposits.
If a customer withdraws the principal amount, that deposit will be considered fully and finally settled. If the customer has any outstanding loan or liability with the transferring bank, it will be adjusted from the deposit amount before the refund.
Customers who do not withdraw their deposits immediately and keep their accounts active will continue to receive profit at the applicable contracted rate. However, if a fixed deposit is broken before maturity, the principal amount can be withdrawn but no profit will be paid on that amount. If a partial amount is withdrawn, profit will continue to apply to the remaining balance under the applicable rules.
Bangladesh Bank Executive Director and spokesperson Arif Hossain Khan said all preparations have been made to return customers’ deposits. He said Sammilito Islami Bank depositors will be paid as promised, and that customers have no reason to panic.
Bangladesh Bank has cautioned depositors to avoid excessive crowding or disorder at bank branches over the withdrawals. In particular, those who do not need the money immediately have been asked not to come to the bank on the first day, but on subsequent days instead. The Bangladesh Bank spokesperson said that if everyone shows up at bank branches to withdraw money at the same time, normal operations could be disrupted. Depositors have therefore been urged to withdraw their money patiently, in stages.