Dhaka, Nov 18 (V7N) — A writ petition has been filed in the High Court challenging the legality of the government’s decision to merge five Sharia-based private banks into a single entity.

The petition was submitted on Tuesday by Barrister Mahsib Hossain on behalf of Shahidul Islam, a general investor of one of the banks. Bangladesh Bank’s Governor, the Finance Secretary, and other relevant officials have been named as respondents in the writ.

On October 9, the Advisory Council approved the merger proposal involving five financially troubled Islamic banks — First Security Islami Bank, Global Islami Bank, Union Bank, Exim Bank, and Social Islami Bank.

Work is underway to form a new Sharia-based bank by combining their assets and liabilities. Two names have been proposed for the new entity: United Islamic Bank and Sammilit Islamic Bank.

According to Press Secretary Shafiqul Alam, the consolidated bank will begin operations with an authorized capital of Tk 40,000 crore and a paid-up capital of Tk 35,000 crore. Of this, Tk 20,000 crore will come from government funds, while Tk 15,000 crore will be converted into capital through a bail-in — a process that turns a portion of institutional depositors’ loans or claims into shares. Depositors are expected to receive payouts later as per the approved resolution plan.

A bail-in allows banks to stabilize by canceling or converting the dues of creditors and depositors into equity, reducing the need for external bailouts and minimizing pressure on the state exchequer.

END/SMA/AJ