Depositors withdrawing money from banks
Staff Reporter :
Panic has gripped the entire banking sector as depositors rush to withdraw their hard-earned money amidst the ongoing process of merging banks in the country.
This unease stems from controversial decisions surrounding the mergers, including the imposition of a ban on journalists’ access to the central bank, Bangladesh Bank (BB).
Sources within respected banks have confirmed that this panic has prompted widespread withdrawals by depositors. Many are facing a dilemma over whether to keep their funds in the banks or not, with fear driving some to withdraw their money altogether.
Even institutional depositors are not immune to this trend. A Shariah-based private bank has reported receiving 12 deposit refund applications in the past week alone, all of which are for capital Fixed Deposit Receipts (FDRs).
The impact of this panic is evident in the significant loss of deposits experienced by some banks. For instance, Basic Bank has seen a withdrawal of over Tk 2000 crore following news of its merger with City Bank.
Approximately Tk100 crore has been withdrawn from BDBL, with similar trends observed among other banks slated for mergers. Managing Directors (MDs) of these banks express concern over potential losses of deposits.
Abu Md Mofazzal, Acting Managing Director (MD) of BASIC Bank, highlighted the repercussions of the bank’s announcement to merge with a private bank, stating, “As a state-owned bank like Sonali and Janata, BASIC Bank holds deposits from many government institutions and organisations. However, following the merger announcement, depositors have begun withdrawing funds.”
He noted that various institutions have already withdrawn over Tk2000 crore in deposits, anticipating BASIC Bank’s transition into a private entity.
Consequently, BASIC Bank’s board of directors has opted to address the situation by proposing a merger with a government-owned
bank, according to the acting MD. Speaking on the condition of anonymity, a senior official of National Bank voiced concerns over deposit retention amid recent board changes.
“It has become increasingly challenging to retain deposits following the dissolution of the old board and the formation of a new one.
The new board should be granted a grace period of at least six months. Rushing into a merger decision now would not bode well for the bank,” the official emphasised.
Similar sentiments are echoed by the top management of UCBL, which is also scheduled to merge with National Bank. A senior official of UCBL noted the prevailing panic among depositors, leading to widespread withdrawals from the bank.
Meanwhile, Basic Bank has expressed reluctance to merge with City Bank, preferring instead to merge with a government-owned bank. The bank’s board of directors has officially communicated this preference to the government.
However, neither the spokesperson for Bangladesh Bank nor other officials involved in the bank merger process have provided comments on the matter.
