There has been a lot of curiosity and discussion in the banking and financial sector of Bangladesh about bank consolidation or mergers for quite some time. The citizens of the whole country have never witnessed this type of business strategy in normal situations.

Even though, when 10 Pakistani-owned banks were combined into four state-owned banks—Sonali, Janata, Agrani, and Rupali—after Bangladesh gained its independence in 1972. That time, public was not very interested in the topic of bank consolidation just after independence. The issue of bank consolidation immediately after independence did not cause much stir in the public mind. Because the nine months were an unforgettable one, like to a brutal battle, and the people of the country were somewhat stunned by the bewilderment of the victory achieved later. A sizable portion of the populace was uninterested in the topic because, at the time, fewer individuals used banking services than in the current era of financial inclusion. This outcome of West Pakistani owners abandoning their institutions was also expected. In 2010, 38 years after the first merger, there was another bank merger. The Bangladesh Development Bank was created by merging Bangladesh Shilpa Bank and Shilpo Rin Shangsha. Since the public at large had little interaction with the two combined organizations, they were not particularly interested in learning about the merger. The two consolidation situations mentioned above are not the same as the current action that is being discussed. In order to comprehend this, let's take a brief glance back. About ten years ago, the country's overbanking situation made it clear that weak banks would eventually need to be consolidated. Several private think tanks suggested weak bank should mergers that time. Then, in 2018, when the previous government came to an end, Finance Minister Abul Mal Abdul Muhith acknowledged that a number of irregularities and loan defaults had caused the banks to weaken. He asked bank owners for support with creating an appropriate policy after seeing that bank mergers were necessary in this situation. After that, this will be the new government's announcement at the start of the term, according to Finance Minister AHM Mustafa Kamal. He said that the operations of several privately owned banks are unsatisfactory. The Bangladesh Bank will take the lead in combining these feeble banks with robust ones. He committed to make the required new laws in order to achieve it. It required over four years to take any meaningful action in this area, even after two finance ministers made realizations and statements and continued to advise experts. It can be considered that the newly appointed Bangladesh Bank leadership has showed accountability, begun the required repairs, and taken the situation seriously. Although the terms "merger" and "acquisition" are sometimes used synonymously in English commercial contexts, they have important distinctions. Knowing that a merger is the coming together of two organizations through an agreement to grow more powerful, grab new markets, lower operational costs, and produce larger profits as part of business strategy management is pertinent information for general readers. This is typically accomplished by the two businesses making decisions on their own, which is a widely used and recognized business technique. Conversely, an acquisition occurs when a business purchases all or most of the stock of another business. Owners of the purchased company can surrender whole ownership or, in certain situations, continue as minority partners in the acquiring company. In the global context, there are numerous instances of bank consolidation. However, the circumstances were dissimilar. To give an illustration, consider India, which saw 34 bank mergers between 1969 and 2020. These are mergers that are both required and consensual. At various points in time, a number of commissions were established to oversee the growth and structural changes of the Indian banking industry. The most influential and talked-about commission among them was the "Narsingh Committee," which was headed by M. Narsingh, a former governor of the Reserve Bank of India, and established in 1991. In 1998, this group was reorganised under the same chairmanship. Both committees recommended strengthening different weak and strong banks and financial institutions by consolidation and restructuring the banking systems of the country to make them world-class institutions. In response to this advice, twenty mergers involving a total of twenty banks of various sizes and kinds occurred between 1999 and 2020. A portion of these merger choices were required, while others were optional. The central bank of India steps in and takes action to consolidate banks that have grown unhealthy because of an excessive amount of bad loans and other flaws. Protecting the interests of the public and depositors, ensuring sound governance, and, most importantly, establishing stability in the financial sector were the goals of this kind of consolidation. It was also recommended by the Narasimha Committee that peer banks should consolidate. Additionally, care was taken to make sure that troubled banks would not be forced to be acquired by trustworthy banks. Analysts have expressed dissatisfaction with the committee's decision to begin the process of consolidating weak and strong banks, even though the process has already begun. The combination has had many different kinds of outcomes. In tiny banks, the intended improvement was achieved, but in most other cases, the opposite has occurred. It is important to keep in mind that Bangladesh has launched numerous programmes and established commissions to reform the banking industry since the 1980s. Their different recommendations have been applied piecemeal. However, resistance and barriers from different stakeholders mean that the intended benefits are still elusive. Additionally, the banking industry was unable to be restored to a state of health as a result of the varied pressure exerted by the interested parties. Consequently, a number of "accidents" and malpractices that went unpunished have weakened this crucial industry. The measures that the central bank is doing now are necessary to get out of this predicament. The recent hurried "merger" process of Padma and Exim Banks is the primary cause of the creation of this situation. Those in conscious circles and those connected to banks are quite curious and have many questions about this. Those in conscious circles and those connected to banks are quite curious and have many questions about this. Several practical challenges arise as a result of Bangladesh Bank's instructions. Also, there is a long time span for this. The bank consolidation process is a lengthy and intricate operation. The final merger decision for Bangladesh was accepted in December 2008, during the final caretaker government. On the government-directed road, however, it took two years to put the decision into effect for two institutions with a small network. In nations where there are "excess" banks in need, consolidation is the only option available. Because of this, the central bank has promised to maintain a number of crucial indicators in the consolidation guidelines, such as the minimum capital preservation, provisioning shortfall, CRR, SLR, liquidity resource ratio, and other required support. These actions can be seen as constructive steps. At the same time, India's expertise can be used to guide integration process steps. However, the initiative's benefits won't materialise if a few crucial difficulties aren't resolved first; instead, the vulnerability will spread throughout the banking industry. Finding the cause and effects of the substantial amount of non-performing loans made by the weaker banks, as well as evaluating the "financial health" of the banks using an independent, trustworthy audit firm, would be the first major task. Other solutions should be sought rather than piling these defaulted debts obtained through fraud and deceit onto respectable banks. Second, choose loans that are anonymous in order to conceal weak banks. That is, identifying the benami borrower—a process that is inherently simple—and punishing the implicated officials and directors with severe consequences. Particular instructions regarding how the gap will be reimbursed should be provided if these debts are not recouped. Thirdly, once the financially troubled banks have consolidated, there needs to be a rational solution for the unskilled man power force's compensation, future, and tenure. Above all, action needs to be taken to ensure that a similar financial loss occurrence at Padma Bank never occurs. Any of the combined banks won't have to go through the process of merging with another bank in the future.