5 banks provide Tk945cr liquidity support to 4 weaker banks

As part of efforts to overcome financial difficulties, four weak banks have received liquidity support totalling Tk945 crore from five stronger banks, with guarantees from the Bangladesh Bank.

Bangladesh Bank confirmed this development on Wednesday.

The banks receiving the liquidity support were First Security Islami Bank, Social Islami Bank, Global Islami Bank and National Bank, while those extending the loans were City Bank, Dutch-Bangla Bank, Mutual Trust Bank, Eastern Bank and Bengal Commercial Bank.

The weaker banks would get total liquidity support worth Tk6,000 crore in phases from their stronger counterparts.

Bankers told reporters that the four weak banks receiving liquidity support are facing issues due to a crisis of confidence.

They believe that the Tk945 crore assistance already provided is quite minimal. However, they indicated that if confidence can be restored, these banks have the potential to recover.

On 22 September, Bangladesh Bank announced a special initiative where financially robust banks would extend loans to weaker banks for a limited period as part of a deposit placement strategy.

While no bank is being forced to participate, the central bank's guarantee to repay the loans has reassured stronger banks, encouraging them to provide this crucial liquidity support.