The Central Bank of the United Arab Emirates (CBUAE) has imposed restrictions on debit transactions from four branches of Bangladesh’s state-owned Janata Bank in the United Arab Emirates (UAE) due to a capital crisis. It has also asked them to stop opening new customer accounts and to prepare for a phased winding down of existing businesses. As a result, Janata Bank’s operations in the UAE are on the verge of being shut down.
The CBUAE has issued this directive due to the inability to maintain the required paid-up capital as per the Central Bank of the United Arab Emirates regulations and the critical situation of Janata Bank’s overall operations in Bangladesh.
According to the rules of CBUAE, the paid-up capital of Janata Bank in the United Arab Emirates is currently 400 million dirhams. The current paid-up capital is 100 million dirhams. The deficit is 300 million dirhams or about 1000 crore taka (based on 33.50 taka per dirham). The Central Bank of the United Arab Emirates has instructed the bank to close its operations if this deficit is not met. Because if there is not enough paid-up capital, the risk of customer deposits increases.
Earlier in 2022, with the approval of Bangladesh Bank, Janata Bank had increased the paid-up capital of its UAE branch from 75 million to 100 million dirhams. However, that too was not enough to meet the current regulatory requirements.
On July 8, CBUAE Assistant Governor Ahmed Saeed Al Kamji wrote to Janata Bank UAE CEO Mohammad Kamruzzaman, instructing him to inform the board of directors of Janata Bank’s head office and inform them of the decision immediately. On July 9, CBUAE also wrote to Janata Bank Bangladesh’s Managing Director Mohammad Mujibur Rahman and the Offsite Supervision Department of Bangladesh Bank.
In such a situation, the matter was discussed in detail at the 884th meeting of the Board of Directors of Janata Bank held on July 14. In that meeting, it was decided that an urgent meeting was required to deal with the situation, involving the Financial Institutions Division, Bangladesh Bank, the Ministry of Foreign Affairs, and the Chairman and Managing Director of the bank.
Accordingly, Janata Bank Managing Director Mohammad Mojibur Rahman formally informed the Secretary of the Financial Institutions Division of the Ministry of Finance about the matter in a letter on the same day. He also requested an urgent meeting to be held between the Financial Institutions Division, Bangladesh Bank, the Ministry of Foreign Affairs, and the Chairman and Managing Director of the Board of Directors of Janata Bank to resolve the issue.
The letter, signed by Ahmed Saeed Al Kamji, Assistant Governor of the CBUAE, said that regulatory action is being taken due to significant concerns at the group level, capital shortfalls and violations of the minimum capital requirements of the banking regulations. As a result, only limited withdrawals of money from Janata Bank’s accounts with the UAE Central Bank will be allowed against depositors’ demands.
The letter also said that all types of money transfers and withdrawals should be stopped immediately and the approval of the central bank should be obtained for every debit transaction related to customer claims. At the same time, the bank has been asked to focus on fully settling existing liabilities and business without accepting new customers.
In a letter sent to the head office in Dhaka on July 9, Janata Bank’s UAE branch chief executive Mohammad Kamruzzaman said that as per the decision of the UAE Central Bank, the branches will have to refrain from establishing new customer relationships and prepare to wind down existing operations. He has sought the board’s guidance on the next steps in this regard.
When asked about this, Janata Bank Managing Director Mohammad Mujibur Rahman told TBS on July 18, “The Central Bank of the United Arab Emirates has announced an increase in paid-up capital as per their rules. Now, the bank has proposed to the Central Bank of the United Arab Emirates to increase the paid-up capital to 400 million dirhams in stages. Janata Bank has announced a plan to create this paid-up capital in stages over three years. If the Central Bank of the United Arab Emirates does not agree to this proposal, the paid-up capital will be increased with the help of the government.”
When asked about the concerns expressed by the Central Bank of the United Arab Emirates due to the critical situation of Janata Bank in Bangladesh, Mujibur Rahman said, “Most countries in the world are concerned about the overall banking sector of Bangladesh. Because nationally, more than 20% of defaulted loans in the banking sector are a concern. In that case, 70% of Janata Bank’s loans have become defaulted. This is certainly a concern. However, the bank is still alive. The bank’s SLR is fine. Agricultural and microloans are being distributed. Government LCs are being opened and settled. General LCOs are also being opened. New cards are being issued. Janata Bank is ahead in innovation. 125 crore taka is being paid monthly without any kind of debt.”
He said, “It is true that large loan disbursements have been stopped. Cases have been filed to recover money from defaulters. Before the fall of the government in 2024, loans of Tk 24,000 crore were disbursed against only Tk 1,084 crore as collateral. As a result, money cannot be recovered by filing cases. Janata Bank is now working with small customers. It is hoped that the bank will turn around soon.”
He also said that since 2016, all of the profits made by the branches in the United Arab Emirates have been deposited there as paid-up capital.
In another letter dated April 22, Ahmed Saeed Al Kamji, Deputy Governor of the UAE Central Bank, said that a review of the audited financial statements for 2024 showed that the capital of Janata Bank’s head office had also fallen below the minimum requirement of 2 billion dirhams equivalent as per UAE regulations. At the same time, the bank’s actual capital is in a more negative position due to the provision deficit.
To deal with this situation, the bank’s chairman, M Fazlur Rahman, promised to increase the capital gradually in a ‘commitment letter’ sent to the UAE Central Bank on May 10. But later, the regulatory body was not satisfied and took strict measures, including imposing restrictions on withdrawals.
According to Bangladesh Bank data, Janata Bank’s capital deficit at the end of December 2024 was Tk 52,891 crore. And at the end of last March, the bank’s safety reserve deficit (provision short) stood at Tk 50,131 crore. At the end of last March, Janata Bank’s total outstanding loans stood at Tk 74,996 crore, which is 73.94% of the bank’s disbursed loans. The bank is unable to maintain the necessary provisions against the huge defaulted loans.
Activities of four branches uncertain
Janata Bank opened a branch in the United Arab Emirates in October 1976. The initial paid-up capital was 12.70 million dirhams. Currently, Janata Bank has four branches in Abu Dhabi, Dubai, Sharjah and Al Ain. These branches mainly collect and send remittances from expatriates. In addition, banking services to NRBs are also one of the functions of these branches. In addition, the branches open LCs for import and export, provide trade finance and guarantee facilities, collect general deposits and provide commercial loans.
Janata Bank has made a profit of 32 million dirhams from its operations in the UAE till 2020. Of this, 25 million dirhams has been converted into paid-up capital. However, in 2017, Janata Bank brought in an equivalent of 8.36 million dirhams from the income of these four branches.
Concerned officials fear that the future operations of the branches are facing uncertainty as the UAE Central Bank has stopped accepting new customers and started the process of winding down existing operations, in accordance with the latest directives.
Janata Bank’s audited financial report for 2025 has revealed information about huge defaulted loans and a large capital deficit. Those concerned say that in addition to the domestic financial crisis, this move by foreign regulatory agencies has created new major challenges for the bank.
The bank’s audited financial report for 2025 showed that it had a net loss of Tk 3,931 crore for the year, which is about 28% more than the previous year. At the same time, the bank’s net interest income stood at negative Tk 5,903 crore. This means that the interest that had to be paid against deposits could not be recovered from loans. As a result of last year’s losses, the bank’s net asset value per share fell to negative Tk 108.51. This means that the bank’s liabilities are more than its assets, according to the calculation. As a result, it has become difficult to restore its financial base without providing new capital.
A senior Bangladesh Bank official told TBS on condition of anonymity, “The financial situation of Janata Bank is not good. Janata Bank is not in a position to raise funds to meet the capital deficit of its UAE branch from its own funds. The country is also facing various crises. As a result, the government will have to take a decision on this matter. The government owns all of Janata Bank’s domestic and foreign institutions. Bangladesh Bank will inform the government about the banking rules and regulations. The government will have to decide whether to operate Janata Bank’s UAE branch with this amount of money.”
When asked what the process would be for closing the bank in the United Arab Emirates if the government does not provide funding, he said, “It will be according to the rules of the central bank of that country. The bank will be closed by calculating the paid-up capital there, the deposits it has taken, and other rules and regulations. However, even in that case, Janata Bank will have to face a lot of expenses.”
