Sadequr Rahman, a 73-year-old man, attempted to withdraw remittance funds from the Savar branch of Social Islami Bank Limited (SIBL), the money which his son had sent from Saudi Arabia in October.
Raisuddin, son of Sadequr, sent Tk 100,000 on 24 October to cover family expenses and medical costs for his elderly parents.
Bangladesh Bank provides liquidity guarantee of Tk 6,585 crore to 7 banks
As of November 13, Sadequr had managed to withdraw Tk 35,000 in three installments.
Speaking with this correspondent over the phone, Sadequr said he needed to withdraw at least Tk 70,000 to meet his family’s expenses. But, bank officials requested that he take the money in several installments, as SIBL faces a severe cash shortage.
Like Sadequr, many customers of crisis-hit banks associated with the S Alam Group are struggling to access their hard-earned deposits due to widespread loan defaults. Borrowers have gone into hiding, and their businesses have become "sick" due to mismanagement of funds, according to an industry insider.
Abul Hossain (name changed), an official at the Savar branch of SIBL, told UNB that the bank is facing significant difficulties, as many depositors are seeking to withdraw their full balances.
He said the branch holds deposits amounting to Tk 87 crore, and that if even one-third of depositors attempt to withdraw money at short notice, it would be challenging for any bank.
According to Bangladesh Bank (BB) regulations, deposited funds are invested in various long-term loans.
No liquidity crisis, Tk 5,585cr support provided to 7 banks: Bangladesh Bank
Hossain added that they are providing cash to depositors in small amounts and have assured them that their money will be returned in installments.
The circulation of cash has decreased recently, but the bank’s management is working to recover its loans by regularising loan installments.
Under the central bank’s (BB) guarantee to access liquidity support from the inter-bank money market, Islami Bank, Social Islami Bank, First Security Islami Bank (FSIB), Global Islami Bank, National Bank, and Union Bank have received several thousand crore taka in liquidity support from more financially sound banks.
Despite this, depositors continue to gather at branches, head offices, and ATM booths of these cash-strapped banks, but they often cannot withdraw the amounts they need.
Apart from National Bank, the Chattogram-based conglomerate S Alam Group has a controlling stake in the boards of the other banks now facing liquidity crises.
A significant portion of loans was directed towards the S Alam Group, with funds reportedly siphoned abroad, rendering the loans in default. Consequently, banks linked to the S Alam conglomerate are experiencing a substantial cash deficit relative to customer demand.
Muhammad Foranullah, the acting Managing Director of SIBL, told UNB that the bank is collaborating with the central bank to arrange instant liquidity solutions to meet cash demands.
The bank has also collected loan installments and deposits from customers amounting to approximately Tk 1,500 crore over the last two months, which has boosted SIBL’s cash flow.
In response to a query, he said SIBL is currently meeting depositor cash demands as required. But, some branches are encountering issues when multiple customers attempt to withdraw cash simultaneously.
Foranullah went on to say, “Everyone is aware of the problem, but it will be prolonged if customers continue to withdraw cash beyond their immediate needs. Depositors will receive their money as the bank returns to normal operations.”
Mohammad Abdul Mannan, the chairman of FSIB, mentioned that normal banking activities have resumed following liquidity support from the inter-bank money market.
He explained that the bank has successfully recovered substantial funds from borrowers since its board was restructured.
He noted that FSIB is prioritising repayments to meet customers’ basic needs, medical emergencies, urgent situations, and remittance encashments.
The bank is also working to repay larger depositors in phases.
Abdul Awal Mintoo, Chairman of National Bank, told UNB that the bank is paying its customers, though large withdrawals will be processed in phases.
He said these problems have not arisen overnight but have developed over several years.
Mintoo assured that the bank’s position would improve over time, asking depositors to remain patient.