Now First Security, National, Exim banks get Tk265cr liquidity support 

Cash-strapped Fast Security Islami Bank, National Bank, and Exim Bank received liquidity support of Tk265 crore today (19 November) from four private sector lenders under a Bangladesh Bank guarantee scheme.

Dutch Bangla Bank, City Bank, Pubali Bank, and Eastern Bank provided the fund under the central bank arrangement aimed at supporting banks facing liquidity crises caused by irregularities and corruption.

According to data from the Bangladesh Bank, a total of seven distressed banks, including these three, have received Tk7,050 crore since the beginning of October.

Bankers say the current approach of the Bangladesh Bank in providing support is insufficient. If liquidity support is not increased, customer confidence in banks will continue to decline.

Clients are already leaving empty-handed after attempting to withdraw money at various bank branches. Bank employees are facing harassment and even physical abuse for being unable to disburse funds, they added.

Therefore, urgent measures need to be taken to address how banks can access adequate liquidity, the bankers emphasised.

About 12 banks have been facing an acute liquidity crisis for the past two years due to loan fraud and various irregularities. Among them, eight banks were under the control of the S Alam Group during the previous regime of the deposed prime minister Sheikh Hasina.

These banks even failed to maintain the required Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) with the central bank. However, former governor Abdur Rouf Talukder took no action against these lenders. As the liquidity crisis worsened, transactions were allowed despite the current account deficit, in clear violation of regulatory rules.

However, after the fall of the Awami League government on 5 August amid a mass uprising, new Governor Ahsan H Mansur stopped all the undue facilities that had been granted. As a result, the true financial condition of the banks began to surface.

There are numerous instances where banks have been unable to refund depositors. As a result, the central bank dissolved the boards of several banks that were controlled by loyalists of the Awami League. To date, the boards of 11 banks, including eight controlled by S Alam, have been dissolved and reconstituted.

According to Bangladesh Bank data, Islami Bank has so far received Tk2,095 crore, SIBL Tk1,175 crore, First Security Islami Bank Tk1,050 crore, National Bank Tk985 crore, Exim Bank Tk1,050 crore, Union Bank Tk400 crore, and Global Islami Bank Tk295 crore.

Governor Mansur said on Monday that it is the central bank's responsibility to protect all banks. Special initiatives are being taken for those banks that have not yet turned around despite the change in management. "All depositors will be protected," he stressed.

On the same day, Islami Bank Chairman Obayed Ullah Al Masud said deposits have increased by around Tk5,000 crore in the last three months.

He also said remittance inflows are on the rise, but new investments have slowed down. To boost deposits, three officers are being appointed at the bank's 2,700 agent points, where they will play a key role.

As of the end of August 2024, it is reported that the current account deficit of at least nine private sector banks has surpassed Tk18,000 crore.

According to central bank data, among the banks that have been freed from S Alam's control, First Security Islami Bank has the largest deficit, exceeding Tk7,269 crore.

Social Islami Bank follows with the second-largest deficit of Tk3,394 crore, while National Bank ranks third with a deficit of Tk2,342 crore.