State-run Bangladesh Development Bank PLC got primary approval from its board to merge with another state financial institution Sonali Bank.

The BDBL formally showed interest for the merger and sent the board decision to the Bangladesh Bank, officials of the bank said.

The board of directors of BDBL in an emergency meeting on April 8 approved the merger plan, Md Habibur Rahman Gazi, managing director and CEO of BDBL, told The Daily Star.

The merger decision was first raised in a meeting between the officials of Bangladesh Development Bank, Sonali Bank and Bangladesh Bank, at the central bank headquarters in Dhaka on April 3.

The next day, Sonali Bank approved the merger proposal.

Industry insiders had said the government took the decision in principle and informed the banks about the planned merger.

In 2009, Bangladesh Shilpa Bank and Bangladesh Shilpa Rin Sangstha merged to form Bangladesh Development Bank Ltd.

The new entity is still creaking under the weight of bad loans.

The NPLs of BDBL stood at Tk 982 crore in December, which made up 42.46 percent of the disbursed loans.

On the other hand, Sonali had loans of Tk 93,096 crore as of December 2023.

Of the sum, Tk 13,150 crore had turned sour, which was 14.1 percent of the total credits disbursed, BB data showed.