Bangladesh Bank’s latest report shows that while the country’s overall default loans fell by Tk 870 billion in the last quarter of the previous year, five merged banks saw their non-performing loans rise by Tk 65 billion. The combined default loans of these banks—Exim, Social Islami, First Security Islami, Global Islami, and Union Bank—reached Tk 1.66 trillion, accounting for 84.22 percent of their total loans.

Officials attributed the increase to financial misconduct by former bank leaders Nazrul Islam Mazumder and Saiful Alam, who allegedly took large sums under various names and failed to repay. The Bangladesh Financial Intelligence Unit reported that S. Alam Group alone withdrew Tk 1.02 trillion from these banks. Persistent liquidity shortages and capital deficits led the government to merge the five institutions.

Bangladesh Bank has been working for a year on the merger, including legal and policy preparations, asset and liability reviews, and simulation exercises for a new state-owned Shariah-based bank. The merged entity will have Tk 350 billion in paid-up capital, of which Tk 200 billion will come from the government and Tk 150 billion from deposit-to-share conversions.