Bangladesh Bank Governor Ahsan H Mansur announced on Saturday that the newly United Islami Bank, created through the merger of five distressed Shariah-based banks, is set to launch operations next week.

The initiative is being carried out under the Bank Resolution Ordinance, marking one of the largest restructuring efforts in the country’s banking sector.

Speaking at the Fourth Bangladesh Economic Conference 2025 in Dhaka, the governor said the merged entity will start with a paid-up capital of Tk35,000 crore, supported by a government injection of Tk20,000 crore. “We are turning five weak banks into one strong bank,” he said.

NPL crisis will take 5-10 years to resolve

Governor Mansur said the ongoing non-performing loan (NPL) crisis remains the biggest challenge for the banking system. With overall NPLs now standing at 35%, and total bad loans crossing Tk6.5 lakh crore as of September, he warned that recovery would be a long-term process.

“It will take 5 to 10 years to overcome this situation,” he said, adding that NPL figures may rise until December before beginning to decline.

He emphasised that politicisation of the central bank had played a central role in the deterioration of asset quality. “Many actions were taken under political direction.

Such interference must stop.”

The governor reaffirmed that Bangladesh Bank will take strict legal action against troubled banks and non-bank financial institutions (NBFIs). The central bank is already in the process of closing nine NBFIs, with the government extending full cooperation.

“This will not be a selective process. Institutions that continue to deteriorate will face action,” he noted.

Dollar market stable, Imports flowing normally

Mansur said the foreign exchange market is now fully market-driven and “more stable than needed,” with the exchange rate at Tk122.50. He dismissed concerns about import constraints, saying banks have adequate dollars, and any LC can be opened if businesses arrange the necessary funds. He also assured that there would be no supply concerns during Ramadan, as LCs for all essential items have already been opened.

Imports of Ramadan essentials surge

According to Bangladesh Bank data, LC openings for six key Ramadan items rose sharply in September–October compared to last year: Soybean oil: 36%, Sugar 11%, Lentils 87%, Chickpeas 27%,Yellow peas: 294% and Dates 231% The Governor said the ideal gap between the policy rate and inflation is 2.5–3 percentage points. With inflation now at 8.20%, he hinted that the policy rate may be reduced once inflation falls to the 7% range.

City Bank Managing Director Mashrur Arefin said credit growth remains slow as businesses wait for clarity on economic direction ahead of the upcoming election. However, he noted improvements in key indicators, including a reduction in the current account deficit from $19 billion to $400 million, and a $2 billion surplus in the financial account.

He also pointed out that reserve money has fallen to around Tk3 lakh crore, while deposit growth remains at approximately 10%.

Crisis of trust in regulation

BIDS Director General AK Enamul Haque said that an excessive “catch-the-thief” mentality across regulatory institutions has created distrust among businesses. “Without a trust-based economy, investment cannot move forward,” he said. He added that the country’s tax administration still functions like the historical “zamindari system,” focused more on collecting revenue than supporting economic development.