The merger idea was floated after the IMF suggested that the central bank prepare a road map to reduce default loans as part of the conditions for its $4.7 billion loan package.
The board of directors of BDBL approved the merger plan in an emergency meeting on April 8, said Md Habibur Rahman Gazi, managing director and CEO of the bank.
Merging a weak bank with a strong bank without addressing the issues that caused the weak banks to fail in the first place might bring down both the banks
The most recent bank merger proposal in Bangladesh reflects a pressing need for action due to Bangladesh Bank's determination to instill essential discipline and oversight in the financial sector, which is plagued by widespread irregularities.
Bangladesh Development Bank Ltd (BDBL) will be merged with Sonali Bank while Rajshahi Krishi Unnayan Bank (Rakub) will be taken over by Bangladesh Krishi Bank (BKB), according to a central bank official.