The Bangladesh Bank has loaned 12,500 crore taka to three private banks, Islami Bank, National Bank, and AB Bank, to help them improve their financial positions for the outgoing year. According to the plan, the Bangladesh Bank will collect this loaned amount today, Wednesday, after providing it earlier in the week.
Over the past 15 years, these banks have fallen into serious liquidity crises due to various irregularities and mismanagement. One major issue has been their inability to maintain the required Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) set by the Bangladesh Bank, primarily because of loan mismanagement. To meet the SLR, these banks used to hold government bonds and Treasury bills, but they’re now struggling to find new collateral to borrow more money.
To help these banks show a surplus in their financial accounts by the end of the year, the Bangladesh Bank granted special loans to these banks.
Of the total 12,500 crore taka loaned, Islami Bank received 5,500 crore taka, National Bank borrowed 6,000 crore taka, and AB Bank was granted 1,000 crore taka. The banks will have to pay an interest rate of 11.5% on these loans. The money that was loaned on Monday will be repaid today, Wednesday.
This is a temporary solution to help these banks appear more financially stable at the end of the year. However, the deeper issues of mismanagement and regulatory non-compliance remain, and the banks will need to address that in the long term if they want to stay on solid ground.
Source: Prothom Alo
