BANKS AT THE RECEIVING END7 weak banks get another Tk1,000cr as liquidity support

Seven financially weak banks in Bangladesh have borrowed an additional Tk1,000 crore to address their liquidity deficit.

Previously, Bangladesh Bank arranged Tk5,585 crore in liquidity support through a mechanism whereby 10 stronger banks provided funds to these struggling institutions under a central bank guarantee.

To date, a total of Tk6,585 crore has been extended, though Tk11,100 crore was originally requested.

Islami Bank received the highest assistance with Tk2,095 crore, followed by Social Islami Bank (Tk1,175 crore) and First Security Islami Bank (Tk1,000 crore).

Other beneficiaries include National Bank, Exim Bank, Union Bank, and Global Islami Bank.

The liquidity support was provided by Sonali, Mutual Trust, Eastern, Shahjalal Islami, City, BRAC, Pubali, Dhaka, and Bengal Commercial Bank.

Bangladesh Bank spokesperson Husne Ara Shikha confirmed the latest Tk1,000 crore support, which supplements the initial Tk5,585 crore.

In a recent meeting with managing directors of 17 banks, Bangladesh Bank Governor Ahsan H Mansur urged stronger banks to continue supporting weaker institutions.

Under the arrangement, stronger banks will deposit funds with struggling banks, backed by a central bank guarantee. This requires board approval from the weaker banks and an agreement with the central bank.

The Bangladesh Bank will also hold demand promissory notes from these banks and has committed to covering funds if any supported bank defaults.

In light of restructuring efforts, Bangladesh Bank has revamped the boards of eleven banks, including several of the weak banks, and is investigating large loan embezzlements.