Govt injecting $81.68m into the bank’s overseas operation

A fresh US$81.68-million capital is going to be funneled into Janata Bank’s UAE operations to avert wind-down of its business following persistent capital-shortfall-triggered regulatory restrictions on its reserve accounts.

To this effect, the Financial Institutions Division (FID) Tuesday sent to the Finance Division a letter seeking approval for the government bailout for the state-owned bank’s overseas outfit, sources said Wednesday.

Earlier, the UAE central bank had threatened to freeze Janata Bank’s UAE operations and force a three-year wind-down of the business over its persistent capital shortfall, sources said.

The fund will be sourced from Janata Bank’s head office in Dhaka and routed through its local office to the United Arab Emirates.

Contacted, an official of the Finance Division said, “We are working on the issue and necessary approval would be issued shortly.”

Janata Bank’s UAE operations have been running for 52 years since 1974 and currently it operates four branches and a chief executive office, making it the second-largest foreign bank in the UAE by branch count.

The bank serves roughly 70,000 depositors, 3,800 loan and advance customers, and close to one million remittance senders.

In 2021, the Central Bank of the UAE (CBUAE) raised the minimum capital requirement for foreign banks from AED 40 million to AED 400 million.

Janata Bank’s UAE unit had paid-up capital of only AED 100 million, plus AED 83 million in retained earnings, well short of the new threshold, even though it had repatriated no profits in the intervening time while trying to build up capital.

Citing the persistent shortfall, the CBUAE imposed restrictions on debit transactions from Janata Bank’s reserve accounts held at the central bank, effective July 8, 2026.

A week later, on July 15, the UAE regulator formally asked Janata Bank to begin a rollback to be completed within three years and appoint an administrator.

The CBUAE warned that failure to appoint an administrator and start wind-down proceedings by September 14, 2026 would lead to a permanent freeze of the bank’s reserve accounts and the appointment of an administrator by the authority.

Bangladesh’s ambassador to the UAE met the CBUAE assistant governor on August 18 to seek a resolution.

The ambassador recommended that the Finance Ministry pledge an AED 2.0-billion capital injection and that Janata Bank immediately meet the AED 100-million minimum capital requirements per branch.

The UAE operations’ CEO informed the authorities on September 1 that the CBUAE would begin the winding-down process on September 8 and review progress on the administrator appointment and other compliance measures.

In a September-6th letter to the FID, Janata Bank Chairman Md Fazlur Rahman said the board, at its 900th meeting on September 5, 2026, had decided that the UAE operation was profitable and “should not be closed in national interest”.

An official of Janata Bank who deals with the issue has said, “We hope to send capital to the UAE unit of state-owned Janata Bank by the deadline set by the CBUAE.”

The closure of Janata Bank’s UAE operations could disrupt banking services for around 70,000 depositors, one million remittance customers and 3,800 borrowers, while putting nearly Tk 9.0 billion in outstanding loans at risk of turning non-performing, according to an assessment by the bank’s board.

The board’s assessment, cited in a letter, warns that shutting down the UAE operations would also disrupt a major formal channel for remittances to Bangladesh.

Janata Bank currently channels an estimated Tk 80 billion to Tk 100 billion in remittances annually from the UAE, the assessment said.

“A closure could disrupt formal remittance flows and affect sales of the government’s Wage Earners’ Development Bond and dollar bonds.

“The UAE accounts for around 70 per cent of current CIP (remittance) recognitions,” the assessment reads.

The board has warned that closure could damage the bank’s international reputation, too, jeopardise correspondent banking relationships (RMA) and affect head-office trade-finance operations.

The three-year winding-down would also incur costs for asset disposal, customer liabilities, staff separation, contract termination and IT relocation, while the head office could have to cover administrator fees, salaries and legal expenses.

It could also affect the government’s Probashi Card programme, for which Janata Bank has first-phase distribution responsibility in the Middle East.

Against this backdrop, the board approved transferring US$81.68 million (AED 300 million) from head-office assets into the UAE operations as capital, subject to government and central-bank approval.

It also approved a commitment letter to the CBUAE and a request to the Finance Ministry for the full AED 2.0-billion capital injection recommended by the Bangladesh ambassador.

The board further approved a request for ministry assistance to meet the capital shortfall, with all correspondence cleared for dispatch under the chairman’s signature.

The FID’s approval on Tuesday cleared the immediate AED300-million tranche, which officials say would meet the CBUAE’s per-branch minimum capital requirement and avert the September-14th deadline for initiating formal rollback.

Source: The Business Standard