A decision has been taken to reduce salaries and other benefits as part of the merger process of five financially weak Shariah-based banks.
It is reported that the central bank is going to take this step due to the extreme liquidity crisis and financial irregularities of the banks.
The five troubled Shariah-based banks in the country are – Fast Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank and Exim Bank. These banks are currently in the final stages of merger.
According to analysts, the decision to reduce salaries and allowances will have a direct negative impact on employees and it may increase instability in the banking sector as a whole.
A new state-owned bank named “Sammilito Islami Bank PLC” is being formed by merging these five banks, which aims to restore financial health and establish good governance.
The decision was taken at a meeting with the administrators of the five banks at the head office of Bangladesh Bank on Wednesday (November 26).
The meeting was chaired by Bangladesh Bank Governor Dr. Ahsan H. Mansur.
The administrators said in the meeting that although a total of Tk1,000 crore was requested for assistance to pay salaries and allowances, the central bank approved Tk350 crore. This assistance has been limited to the payment of salaries and allowances.
At the same time, the governor ordered the reduction of salaries and other benefits of the employees due to the weak financial condition of the banks.
An administrator said that there are about 16,000 employees in the five banks, and the decision to reduce salaries and benefits may be effective very soon.
A source confirmed that the Resolution Department of Bangladesh Bank is also finalizing the steps to reduce salaries and allowances.
An employee of Union Bank said that even though salaries are deposited in the accounts, they cannot be withdrawn on time. Due to the deepening crisis in the bank, the employees are under severe financial pressure.
A recent report by the central bank said that all five banks are using depositors’ money to pay salaries to employees – which is very risky for the financial sector and prone to irregularities.
First Security Islami Bank’s financial condition is the most fragile.
In December 2024, the bank showed a negative operating income of Tk4,308 crore.
At the same time, the salary and allowance expenditure was Tk652 crore. As a result, salaries were paid with depositors’ money.
The bank’s annual net loss stood at Tk5,450 crore. Information about serious administrative weaknesses was also found during the Bangladesh Bank’s inspection at the end of August.
Since the interim government took office, the central bank has provided a total of Tk35,300 crore in liquidity support to the banks, which the banks concerned have not yet been able to repay.
