Seven banks facing liquidity crisis get Tk 65.85bn from 9 stable banks

Nine strong banks provide Tk 65.85 billion in liquidity aid to seven struggling banks amid severe cash shortages

Nine stable banks have injected Tk 65.85 billion into seven weak banks to help them get over liquidity shortages.

However, these weak banks had initially requested a total of Tk 111 billion, Husne Ara Shikha, spokesperson and executive director of Bangladesh Bank, told bdnews24.com.

Among the struggling banks, Islami Bank Bangladesh received the highest liquidity support, with Tk 20.95 billion provided by seven stable banks. Social Islami Bank secured Tk 11.75 billion from six banks, First Security Islami Bank received Tk 10 billion from six banks, Union Bank obtained Tk 4 billion, Global Islami Bank acquired Tk 2.95billion, National Bank received Tk 9.20 billion, and EXIM Bank secured Tk 7 billion.

The nine banks extending liquidity support are Sonali Bank, Mutual Trust Bank, Eastern Bank, Shahjalal Islami Bank, City Bank, BRAC Bank, Pubali Bank, Dhaka Bank, and Bengal Commercial Bank.

Shikha said, “Liquidity support will continue for weak banks to ensure depositors’ interests are safeguarded.”

Earlier, Governor Ahsan H Mansur held a meeting with the managing directors of 17 banks to discuss the state of the banking sector.

He instructed stable banks, particularly those with relatively strong deposit positions, to continue supporting weak banks.

After a shift in power on Aug 5, irregularities in the banking sector surfaced.

Specifically, it was alleged that Chattogram-based S Alam Group had misappropriated funds by taking loans in the name of Shariah-based banks under its control.

To address this, Bangladesh Bank appointed administrators to the weak banks receiving liquidity support, except for EXIM Bank.

The remaining six banks were previously under S Alam Group’s control.

Following the power shift, student and public protests demanded that Islami Bank be freed from the S Alam Group’s influence. This led to similar movements across other banks.

Under public pressure, Governor Abdur Rouf Talukder, deputy governors, the head of the Financial Intelligence Unit, or BFIU, and a policy advisor resigned from their positions.

Mansur assumed the role of Bangladesh Bank governor in August.

One of his first actions was to halt unlawful cash disbursements to Shariah-based banks by Bangladesh Bank.

Consequently, these Shariah-based banks began facing severe liquidity crises, preventing customers at First Security Islami Bank, Global Islami Bank, Union Bank, and Bangladesh Commerce Bank from withdrawing even Tk 20,000.

In light of this, the governor authorised weak banks to borrow cash from strong banks. Subsequently, 10 stable banks agreed to provide liquidity support to the weaker banks.