For all latest news, follow The Financial Express Google News channel.
Six weak banks have received Tk 16.40 billion in loans to resolve their liquidity crisis by three relatively stronger banks.
Sonali Bank, Mutual Trust Bank, and Dutch Bangla Bank provided the support to First Security Islami Bank, Social Islami, Union Bank, Global Islami Bank, National Bank and Exim Bank, reports bdnews24.com.
The funds were transferred on Thursday after they were approved by Bangladesh Bank. Islami Bank has also sought similar liquidity support.
Bangladesh Bank official spokesperson and Director Shahriar Siddiqui told bdnews2014.com, “Liquidity assistance has been given to these weak banks in response to their petitions. This assistance will be given to more banks in the future after their applications are scrutinised."
Since the government changeover, the issue of irregularities in the banking sector has come to the fore. In particular, the Chattogram-based S Alam Group has been accused of embezzling loans from the Islamic banks under their control.
Bangladesh Bank has already appointed administrators at all banks that are receiving liquidity support. Aside from Exim Bank, the remaining five banks were under the control of S Alam Group.
A Bangladesh Bank official said, "There is a liquidity crisis in several banks. Ten strong banks have already agreed to give cash to these weak banks. We hope that customers will not have to leave banks empty-handed.”
There has been a significant shift in the leadership of the financial sector since the student-led mass movement toppled the Awami League government on Aug 5. First, a campaign was launched to ‘free’ Islami Bank. Similar campaigns then spread to other banks too.
In the face of protests, Bangladesh Bank governor Abdur Rouf Tarukder, the deputy governor, the head of the Bangladesh Financial Intelligence Unit and the policy advisor resigned.
Ahsan H Mansur took charge as the new governor of the central bank in August. Since taking office, he has put an end to illegal transfers of cash from Bangladesh Bank to Islamic Sharia-based banks.
This led to a liquidity crisis at Islamic banks. At one point, the situation got so bad that customers at First Security Islami Bank could not even withdraw Tk 20,000.
Similar situations played out at Global Islami Bank and Union Bank. Bangladesh Commerce Bank also faces a liquidity crisis.
Under the circumstances Governor Mansur approved cash loans from stronger banks to weaker banks. Ten stronger banks then agreed to provide the loans.
WHO IS GIVING HOW MUCH?
Sonali Bank gave Tk 3.7 billion to First Security Islami Bank
Social Islami Bank received a total of Tk 3 billion. Of this, Sonali Bank provided Tk 2 billion and Dutch Bangla Bank the other Tk 1 billion
Union Bank received Tk 1.5 billion from Sonali Bank
Global Islami Bank received Tk 950 million. Of this, Mutual Trust Bank provided Tk 200 million, while Sonali Bank gave Tk 750 million
National Bank received Tk 3.20 billion. Of this amount, Sonali Bank provided Tk 2.2 billion and Dutch Bangla Bank Tk 1 billion
Exim Bank received Tk 4 billion, the entirety of which was provided by Sonali Bank