9 banks’ current account deficit exceeds Tk18,000cr

The current account deficit of nine private commercial banks in the country has crossed Tk18,000 crore, according to Bangladesh Bank.

The central bank's executive director and spokesperson, Husne Ara Shikha confirmed this on Monday.

The banks involved are National Bank, First Security Islami Bank, Social Islami Bank, Union Bank, Commerce Bank, Exim Bank, Islami Bank, Padma Bank and ICB Islami Bank.

Among these banks, a contract has been signed with Bangladesh Bank to provide guarantees for five banks facing liquidity crises.

As a result, these banks will be able to borrow from relatively stronger banks against the central bank's guarantee.

Additionally, although Exim Bank and Islami Bank have applied, they have not yet signed a guarantee agreement with the central bank.

Meanwhile, Padma Bank and ICB Islami Bank have not submitted any applications so far.

A senior official of the Bangladesh Bank said that when a bank faces a crisis, special loans are typically provided from the central bank.

However, lending from the Bangladesh Bank is akin to printing money directly, which increases the money supply into the market and exerts pressure on inflation.

Given the already high inflation rates, the central bank is arranging loans from other banks instead of providing direct cash.

This means that the money will move from one bank to another in the market, minimising any additional impact on inflation.

Furthermore, the guarantee from the central bank implies that if any of these banks fail for any reason, the central bank will cover those funds.