Liquidity crisis brings 9 banks to knees
Staff Reporter :
Nine banks in the country are grappling with a liquidity shortfall exceeding Tk 18,000 crore, according to recent data revealed by the Bangladesh Bank.
The announcement was made on Monday by the central bank’s Executive Director and spokesperson, Husnay Ara Shikha.
The banks facing the shortfall include Islami Bank, Exim Bank, National Bank, First Security Islami Bank, Social Islami Bank, Union Bank, Commerce Bank, Padma Bank, and ICB Islami Bank.
These institutions are struggling to meet liquidity requirements amidst ongoing financial difficulties.
So far, seven of these banks have approached the central bank, seeking guarantees to access liquidity support totalling over Tk 25,000 crore from the interbank money market.
The banks that have requested assistance are First Security Islami Bank, which sought Tk 7,900 crore, Islami Bank Bangladesh with a request for Tk 5,000 crore, National Bank also asking for Tk 5,000 crore, EXIM Bank requesting Tk 4,000 crore, Global Islami Bank seeking Tk 3,500 crore, Social Islami Bank seeking Tk 2,000 crore, and Union Bank requesting Tk 1,500 crore.
However, Padma Bank and ICB Islami Bank have not yet applied for any guarantee agreements.
Sources from the central bank have indicated that Bangladesh Bank (BB) is unlikely to approve the full amounts requested by the banks.
Instead, guarantees will be issued on a case-by-case basis after careful evaluation of each bank’s financial condition.
In the meantime, Bangladesh Bank has already signed agreements with five of the crisis-hit banks, enabling them to secure liquidity support from the interbank money market.
The agreements, which were finalised on Thursday and Sunday, involve National Bank, Social Islami Bank, First Security Islami Bank, Union Bank, and Global Islami Bank.
Following the collapse of Sheikh Hasina’s government on 5th August, the boards of these banks were dissolved and subsequently reconstituted under new management. Despite this, the financial troubles continue to mount for many of these institutions.
While the liquidity support is intended to help stabilise these banks, the central bank is taking a cautious approach to ensure that the support is distributed responsibly.
According to sources within the banking sector, BB is committed to providing targeted support but will not issue blanket guarantees without a thorough assessment of each bank’s specific needs and conditions.