Cheques of Tk1cr or more from 9 banks blocked for clearance

The Bangladesh Bank has blocked encashment of cheques of Tk1 crore or more issued by nine banks, including six controlled by the S Alam Group, from respective banks or through any other banks.

The Bangladesh Bank's payment system department issued this verbal instruction to senior executives of all banks Monday night, officials from the relevant departments of the Bangladesh Bank and the managing directors of some private banks told The Business Standard.

The nine banks are First Security Islami Bank, Islami Bank Bangladesh, Social Islami Bank, Union Bank, Global Islami, National Bank, Bangladesh Commerce Bank, Padma Bank, and ICB Bank.

Previously, the central bank allowed cheque clearing through other banks even when there were no funds in these banks' current accounts. This facility led to the withdrawal of thousands of crores of taka through various shell companies.

However, the central bank has now imposed this restriction to curb the influence of the Chattogram-based group, which is known for its connections with the ousted Hasina government.

The primary aim of this decision is to prevent S Alam Group from obtaining loans through shell companies, bank officials said.

A senior official at the central bank said, "The banks controlled by S Alam have been facing shortages for a long time. These banks have created such a crisis by taking loans in the name of shell companies. Despite this, former governor Abdur Rouf Talukder regularly provided money to these banks from the central bank's vault through a special facility."

According to the latest Bangladesh Bank report, it provided Tk35,000 crore in liquidity support to Islamic banks, mostly dominated by S Alam Group, in a single day on 30 June under the authority of the governor, a central bank source confirmed.

Bangladesh Bank spokesperson Mezbaul Haque said, "There has been no such instruction from the Bangladesh Bank. However, banks are currently reluctant to process large cheques due to the overall situation."

An official from Islami Bank said that after the change of government, an attempt was made to withdraw Tk889 crore from the bank on the same day through shell companies. However, bank officials stopped these transactions by Golden Star and Top Ten Trading House.

Officials stated, "Both companies are connected to the bank's owners. Because of this connection, the withdrawal of money was prevented following the change of government."

Officials say five cheques from Sonali, Janata, Rupali, Pubali, and City banks were presented for encashment at Islami Bank's Chattogram Agrabad branch last Tuesday. Golden Star issued these five cheques. The company's main account was with the Agrabad branch.

After initial approval by the Agrabad branch manager, the five cheques were sent to Islami Bank's head office for final approval. Tk346 crore was attempted to be withdrawn through these cheques, but the transaction was blocked by the bank's officials. On the same day, the bank also blocked a loan of Tk548 crore for Top Ten Trading.

Currently, nine banks, including eight controlled by S Alam Group, are facing critical financial difficulties. Some of these banks have struggled for a long time to maintain the CRR and SLR with the central bank and are operating with significant deficits in their current accounts.

A central bank official explained that these banks have issued loans exceeding their deposits, which has worsened their current account deficits.

"The Bangladesh Bank has been providing funds to these banks without collateral under special provisions and has opened transaction accounts for them. This has allowed the banks to issue new loans," the official added.

Earlier, the central bank issued an order restricting cash withdrawals of more than Tk2 lakh from any bank.