Depositors erupt as BB claws back profits

Depositors of the five recently merged banks have erupted in anger over Bangladesh Bank’s decision to claw back profits already credited to their accounts over the past two years, triggering protests across the country and escalating tensions in the banking sector.
Angry depositors have launched coordinated social media campaigns, staged demonstrations at branches, and formed human chains in front of head offices. 
In several locations, depositors reportedly locked branch premises, effectively shutting down operations. Unpleasant incidents between customers and bank staff have also been reported.
Using social media to mobilise nationwide, depositors have warned of a large-scale confrontation involving nearly 75 lakh customers. 
As tensions mounted, officials at several branches formally wrote to bank administrators seeking security support.
The five banks involved -- First Security Islami Bank, Global Islami Bank, Union Bank, EXIM Bank and Social Islami Bank -- are being consolidated into a new entity named Sammilito Islami Bank.
On Wednesday, Bangladesh Bank issued letters to the administrators of the five banks announcing a two-year profit “haircut,” under which previously credited profits will be withheld or reclaimed. 
The central bank also instructed the banks to recalculate all depositor accounts. Depositors who have already withdrawn profits during the period will have equivalent amounts deducted from their principal balances.
Such haircut mechanisms are commonly used internationally during bank mergers or severe financial distress as part of restructuring efforts when institutions face solvency challenges.
Amid the growing unrest, the chairman and board members of Sammilito Islami Bank met Bangladesh Bank Governor on Sunday evening. The official inauguration of Sammilito Islami Bank, originally scheduled for today at Hotel InterContinental, has been postponed to January 25.
Speaking to the Daily Sun, Sammilito Islami Bank Chairman Mohammad Ayub Mia said the “haircut” decision was taken in line with international norms and there was no scope for reversal. 
However, he said the loan limit against deposit schemes has been raised from 20% to 40%, allowing depositors to borrow up to 30%-40% of their deposits if needed.
He also said Islamic banking follows a profit-and-loss sharing model rather than fixed interest. 
Audits, he said, found that the banks did not generate profits, and the Shariah Board ruled that profits cannot be distributed in the absence of earnings. Addressing allegations of fund theft, he said such incidents occurred in earlier periods.
>> Biz-3 Col 1