Dismissing the concern about sustainability of the non-conventional banking system, Bangladesh Bank (BB) Governor Abdur Rouf Talukder on Sunday said the central bank's corrective measures would help the Islamic banks rebound fully within the next four to five months.
The BB governor expressed his optimism in response to a number of questions from the media over fate of the Shari-ah based banks following their recent loan-related scams. He was unveiling the Monetary Policy Statement (MPS) for second half of the financial year 2022-2023.
He said the Islamic banks have deposit portfolio amounting to Tk 1.51 trillion and 19 million depositors.
"If these banks face any problem which may badly affect the depositors, the central bank as the last resort comes up with some policy interventions."
The BB governor noted that the banks started facing troubles from September last, when an unscrupulous group spread a rumour of local currency shortfall along with the foreign currency ones in the country's banking system.
It triggered panic among depositors, who were seen withdrawing their money from the banks. Following assurance of enough surplus liquidity from the central bank, the situation started improving, he continued.
Then, some media reported that the Islamic banks had given large amount of loans violating rules that again caused panic among their depositors, leading to mass withdrawal of money from the banks.
The central bank appointed observers in two Islamic banks alongside taking some corrective measures, he added.
"In the last one week, people deposited more money than they withdrew from the Islamic banks. I think, the Islamic banks, riding on the corrective measures, will rebound to their previous state in the next 4-5 months."
When asked about the banks, which made a huge profit by cashing in on the recent volatility in foreign currency rates, he cited their audit reports and said they found that 13 banks made a total profit of Tk 10.34 billion (Tk 1,034 crore), which was 'unethical'.
Following the response of BB's show-cause notice to the banks' top executives, Mr. Talukder said the central bank instructed the lending entities to transfer half of the profit (Tk 5.17 billion) to a separate CSR (corporate social responsibility) fund that would be disbursed in areas like agriculture development, mechanisation and processing.
"We're now monitoring the fund."
Responding to another query, the BB governor stated that their main target was to bring down the growing import cost to the level of the total export and remittance earnings as part of the plan to stabilise the forex reserve, which was under immense pressure in the initial period of this fiscal year.
Sharing the data, he added that the import spending was US$1.3 billion higher than that of the export and remittance earnings in July last. Following various belt-tightening moves, the import cost became $2.8 billion lower than the export and remittance earnings.