By Mynul Hasan Sohel (Dhaka Bureau)
In the face of intense domestic civic protests, anti-corruption social movements, and massive pressure from international donor agencies, the Government of Bangladesh has finally been forced to back down. The Ministry of Finance and the central bank have taken a decision in principle to repeal a highly controversial legal provision that would have allowed former corrupt owners to regain control of distressed and bankrupt banks. This move is being hailed as a major moral victory for ordinary citizens and human rights defenders across the country.
Passed in haste on April 10, lawmakers had quietly inserted a contentious clause, Section 18(A), into the newly enacted Bank Resolution Act. The primary objective of this hidden provision was to provide a legal route for former bank owners- responsible for laundering and embezzling billions of public funds- to reclaim ownership of these institutions. While the decision to scrap this ‘black law’ has brought temporary relief to conscious citizens, public vigilance against the collusion between corporate interests and political power remains high.
Behind the Crisis: Public Deposits Held Hostage by a Few Conglomerates
At the epicenter of this legislative U-turn are five of the country’s leading Islamic lenders: Exim Bank, Social Islami Bank, First Security Islami Bank, Union Bank, and Global Islami Bank. Operating under the shadow of the deposed Awami League regime, a specific corporate trust known as the ‘S Alam Group’ reportedly plundered these institutions at will. Last December, these five collapsing banks were merged through state intervention to form the Combined Islami Bank.
Data from the restructuring process reveals a harrowing picture of how ordinary citizens’ hard-earned savings ended up in the pockets of a select few:
Bank Name | Non-Performing Loan (NPL) Rate
Union Bank | 98%
First Security Islami Bank | 96%
Global Islami Bank | 95%
Social Islami Bank | 62%
Exim Bank | 48%
Combined Average | 79%
The combined default loan burden of these five banks stands at approximately Tk 1.47 trillion ($12.5 billion), representing nearly 79% of their total disbursed credit. In other words, for every 100 Taka deposited by ordinary citizens, plunderers wiped out 79 Taka.
Non-Violent Resistance and Social Movements
The clause was craftily worded to state that if original shareholders ‘promised’ to repay the state-backed bailout funds injected during the rescue process, they could petition to have their shares, assets, and ownership returned. As soon as this loophole came to light, Bangladeshi civil society and social organizations erupted in anger.
Civil rights forums, including Transparency International Bangladesh (TIB), issued stark warnings that implementing this clause amounted to rewarding criminals and turning the country’s banking sector into a permanent sanctuary for plunderers. Public outrage intensified over a fundamental question: Why should state funds be used to rehabilitate the very financial oligarchs whose greed has prevented ordinary citizens from withdrawing their own money from banks?
International Pressure and the World Bank’s Stance
The domestic protests resonated strongly within the international financial system. The World Bank took a firm stance against this plunder-friendly clause, explicitly warning that if the provision remained, $1.65 billion in planned budgetary support and financial sector reform loans for Bangladesh would be immediately suspended.
This international funding is critical for Bangladesh at this juncture to stabilize its foreign exchange reserves, curb skyrocketing default loans, and finance vital imports of fertilizer and fuel. Emphasizing the need for structural and moral integrity, Jean Pesme, World Bank Country Director for Bangladesh and Bhutan, stated in a media release: ‘The legal framework for bank resolution must align with international best practices. This remains essential to effectively address weak and undercapitalized banks, ensure financial sector stability, and foster private sector-led job creation.’
Future Challenges: Shadows of Disquiet Remain
Initially, Finance Minister Amir Khasru Mahmud Chowdhury defended the loophole. He argued that the state coffer lacked the independent capacity to absorb such monumental financial losses without the participation of private capital. Currently, the state-backed rescue package for the Combined Islami Bank requires a massive capital injection of Tk 350 billion, a significant portion of which (Tk 200 billion) will come directly from taxpayers’ money.
Although the government is now moving to repeal the clause, economists and human rights activists remain deeply concerned. They warn that corporate lobbyists and influential oligarchs might still operate behind the scenes during parliamentary reviews to engineer alternative ‘legal loopholes’ under different names. Consequently, civil society must maintain constant vigilance and non-violent resistance.
Putting an end to the culture of filling the pockets of criminals with public money remains the defining economic and social demand of the people of Bangladesh.
##########
The Writer:
Mynul Hasan Sohel: Executive Editor (honorary), Pressenza- Dhaka Bureau.
