Bangladesh Bank withdraws decision to cut deposit profits at Sammilito Islami Bank

PNN News Desk | Dhaka

Bangladesh Bank has withdrawn its decision to impose a fixed-rate “haircut” on the profits earned from deposits held by customers of Sammilito Islami Bank. Under a new directive, instead of reducing deposit profits to a fixed rate of 4 percent, the calculations must be revised by taking into consideration the bank’s effective profit rate during the relevant period.

According to the new directive issued by Bangladesh Bank, profits on individual and non-institutional term deposits and installment-based deposits between January 1, 2024, and December 28, 2025, will not be directly calculated at a fixed rate of 4 percent. Each deposit account must be recalculated by considering the bank’s effective profit rate during the relevant period.

The revised profit rate will also apply to deposits held during the three-day transitional period from December 29 to 31, 2025.

Bangladesh Bank said the previous instructions regarding the “haircut” had been reconsidered after taking into account the need to restore depositors’ confidence, ensure the bank’s long-term stability and address practical complexities associated with adjusting profits.

Earlier, discussion had emerged over a decision to limit the profits of Sammilito Islami Bank depositors to a fixed rate of 4 percent. Under the new directive, deposit accounts can now be recalculated based on the bank’s actual effective profit rate during the relevant period.

Meanwhile, after a long wait, customers of Sammilito Islami Bank have been able to withdraw their deposited funds since September 7. During the first three days after withdrawals began, a total of 27,056 customers withdrew Tk 1,040 crore from the bank.

Alongside allowing customers to withdraw their deposits, the new directive on recalculating profits could play a role in restoring depositors’ confidence in the bank. How effective the measure will ultimately be remains to be seen.