Daily Advisor

Situation

On August 10, 2026, the Cabinet gave final and in-principle approval to the draft Bank Resolution (Amendment) Act, 2026, permanently repealing the clause that allowed former owners to reclaim distressed or merged banks [The Business Standard, August 13, 2026; The Daily Star, August 12, 2026; Dhaka Tribune, August 11, 2026; bdnews24.com, August 10, 2026]. The decision matters now because it closes a re-entry route for former owners of five crisis-hit, Shariah-based private banks that were consolidated into Sammilito Islami Bank PLC [The Business Standard, August 13, 2026]. It also removes a conditional return structure that had never been used. The Cabinet moved to total repeal after no individual or institution formally applied or met the strict capital-re-injection criteria under the provision [Dhaka Tribune, August 11, 2026]. The policy challenge is no longer whether to repeal, but how to lock the repeal into subordinate rules before former sponsors test the gap.

Evidence

• Cabinet approval: On August 10, 2026, the Cabinet granted final and in-principle approval to the draft Bank Resolution (Amendment) Act, 2026, permanently repealing the former owner reclaim provision [The Business Standard, August 13, 2026; The Daily Star, August 12, 2026; Dhaka Tribune, August 11, 2026; bdnews24.com, August 10, 2026].
• Reclaim terms: Under Article/Section 18(A), former directors or owners of banks undergoing or slated for mergers could apply to reclaim control by paying 7.5% of the total funds injected by the government or Bangladesh Bank upfront, with the remaining 92.5% structured to be repaid over two years at a 10% simple interest rate [The Business Standard, August 13, 2026].
• Affected institutions: The clause originally provided a pathway for former owners of First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, and EXIM Bank, which had been consolidated into Sammilito Islami Bank PLC [The Business Standard, August 13, 2026].
• Actual use: No individual or institution formally applied or met the strict capital-re-injection criteria under the provision [Dhaka Tribune, August 11, 2026].

Prescription

1. Ministry of Finance: Publish the approved amendment in the official gazette and issue an explanatory circular to Bangladesh Bank and all distressed or merged banks stating that Article/Section 18(A) is repealed and that no reclamation application can be received after the gazette. Mechanism: statutory publication plus regulator-facing instruction.
2. Bangladesh Bank: Amend the bank resolution framework and standard operating procedures to remove the former owner reclaim option and replace it with an explicit rejection duty for any direct or indirect re-entry proposal from former directors or owners. Mechanism: supervisory circular covering banks undergoing or slated for merger.
3. Bangladesh Bank: Direct the board of Sammilito Islami Bank PLC to adopt a board resolution confirming that former owners of the five named banks have no reclaim right, and to establish a register of any approach from those sponsors. Mechanism: board resolution, register, and mandatory supervisory reporting [The Business Standard, August 13, 2026].
4. Ministry of Finance and Bangladesh Bank: Jointly reconcile the injected capital accounts of Sammilito Islami Bank PLC and issue a written confirmation that no payment tendered on the repealed terms, 7.5% upfront, 92.5% deferred, 10% simple interest, can be accepted as a valid capital re-entry [The Business Standard, August 13, 2026]. Mechanism: joint capital ledger review and public clarification.
5. Ministry of Finance: Convene a short inter-agency review with Bangladesh Bank and the Cabinet to identify and withdraw any legacy circulars or file notes referencing Article/Section 18(A). Mechanism: administrative review and cancellation instruction.

Risks and tradeoffs

The main implementation risk is legal challenge by former owners if the gazette text or Bangladesh Bank circular leaves ambiguity around pending or future reclaim requests. Because no individual or institution formally applied or met the criteria, there is no current application pipeline to unwind [Dhaka Tribune, August 11, 2026]. The exposure is therefore procedural and reputational, not a near-term capital outflow. A second risk is operational: bank staff or resolution teams using old manuals could still accept an upfront payment of 7.5% or structure a repayment at 92.5% over two years at 10% simple interest [The Business Standard, August 13, 2026], creating confusion and potential litigation. The tradeoff is that the repeal eliminates a conditional recapitalization channel. Since that channel had no qualified takers, the immediate fiscal cost is minimal, but the binding constraint is the speed and completeness of regulatory alignment.

Bottom line

The Cabinet has permanently removed the former owner reclaim pathway for the five crisis-hit Shariah-based banks consolidated into Sammilito Islami Bank PLC [The Business Standard, August 13, 2026]. The Ministry of Finance and Bangladesh Bank must now translate the decision into gazette text, supervisory procedures, and board-level reporting before former sponsors test the gap.