National Bank seeks Tk 10bn more in liquidity support

The bank received Tk 40 billion from Bangladesh Bank after the fall of the Awami League government and wants to pay 10 percent interest on the loan

National Bank Limited, suffering from a liquidity crisis, has sought an additional Tk 10 billion from Bangladesh Bank in liquidity support.

The bank earlier received Tk 40 billion from the central bank.

“Bangladesh Bank had told us they would give Tk 50 to 60 billion. However, they gave us Tk 40 billion. Hence we are seeking Tk 10 billion more,” National Bank Chairman Abdul Awal Mintu said.

”This amount is needed to pay the bank clients.”

The central bank asked for details on how and in which sectors the previous amount had been spent and National Bank has been preparing a presentation to explain it, said Mintu.

He complained that the National Bank has been suffering due to the “corruption” of its old board. The new authorities have taken on fresh initiatives to save the bank, he said. As part of these initiatives, they seek Tk 10 billion more from the central bank.

The bank, which had been under the control of business house Sikder Group for the last decade and a half, applied for liquidity support with 10 percent interest this time. However, Bangladesh Bank has yet to approve the new amount, the chairman said.

In November, Bangladesh Bank provided liquidity support of Tk 220 billion to several banks. It printed the currency to provide the support.

In addition to National Bank, First Security Islami Bank, Social Islami Bank, Global Islami Bank, Union Bank and Exim Bank received the support.

After taking office, Bangladesh Bank Governor Ahsan H Mansur had initially said the central bank would not print money indiscriminately to stabilise the banks. However, he had to backtrack on that announcement.

However, he also claimed that Bangladesh Bank collected the money through bank bills and provided that amount to the weak banks. Hence, it could not be entirely called “printing money,” he said.

Some Bangladesh Bank officials told bdnews24.com that the act was tantamount to “money printing” as the amount Bangladesh Bank collected through bills was much less than it paid to the banks.

Meanwhile, Padma Bank sought Tk 13 billion and Janata Bank sought Tk 100 billion in liquidity support. However, Bangladesh Bank has yet to approve it.

A senior official at the central bank said that Bangladesh Bank’s liability would increase if it continued to provide liquidity support to the banks. It would solve the issue in the short term, but create a further crisis in the long term.

The Anti-Corruption Commission filed a case against 29 directors and officials of the National Bank for embezzlement during the Awami League’s rule.

They were accused of embezzling Tk 4.59 billion by creating paper bills. Members of the Sikder family, who controlled the banks for a long time, were named in the case.

Following a family feud of the Sikders, Syed Farhat Anwar was made chairman in December 2023. During his tenure, discussions on merging National Bank with United Commercial Bank began.

The merger initiative has not progressed after the fall of the Awami League government. Meanwhile, National Bank, suffering from loan fraud and irregularities, has faced a severe liquidity crisis.

When Bangladesh Bank dissolved the existing board of the National Bank after the changeover in government, it had been controlled by Chattogram businessman S Alam. Later, BNP Vice Chairman Abdul Awal Mintu, one of the founders of the bank, came back as its chairman.