Banks ordered not to clear cheques for over Tk 10m issued by nine banks

The central bank has sent out a directive to all banks not to clear cheques for more than Tk 10 million issued by nine banks.

The nine banks are Islami Bank Bangladesh, Social Islami Bank, First Security Islami Bank, Union Bank, Global Islami Bank, Bangladesh Commerce Bank, National Bank, Padma Bank and ICB Islami Bank.

Bangladesh Bank gave a verbal order to the commercial banks in this regard on Tuesday. Managing directors and deputy managing directors at several banks confirmed this to bdnews24.com. They said they would be following the directive starting from Wednesday morning.

Seven banks of the S Alam Group had their current accounts running in the red for a long time. Bangladesh Bank has been providing them with extra support. As these banks did not have enough money supply, but were instead clearing the cheques at other banks.

As of now, cheques of any amount issued by these banks could be cashed at any other bank. But from Aug 14, the central bank ordered other commercial banks not to cash any cheque amounting to more than Tk 10 million.

On the other hand, two more banks - Padma Bank and ICB Islami Bank - did not have a deficit in the current account but they failed to maintain the CRR and SLR with the Bangladesh Bank regularly. Hence, the central bank gave a similar order regarding them.

A high-up in the Bangladesh Bank said that it stopped providing the privilege mainly due to the change of government.

“Bangladesh Bank has not given any formal instruction. But some banks could have stopped clearing cheques amounting to over Tk 10 million for some other reason.” said executive Director Mezbaul Haque, spokesman of Bangladesh Bank.

Generally, banks cannot give new loans when their current account runs negative, but these nine banks distributed loans to different groups by taking money from Bangladesh Bank.