United News of Bangladesh

Bangladesh Bank (BB) has provided an emergency liquidity support of Tk 2,500 crore for Islami Bank Bangladesh PLC to help the Shariah-based lender mitigate its severe cash crunch and resume suspended clearing operations. The central bank approved the liquidity support on Sunday, allocating the special fund directly into Islami Bank’s current account maintained with the BB, according to sources in both institutions. Following the financial injection, the bank's halted cheque clearing system has resumed. According to a top executive at Islami Bank, the bank has been facing an exceptional spike in cash demand. "Deposits are almost non-existent at the moment, while everyone is rushing to withdraw their funds," the official said on condition of anonymity. The liquidity strain escalated further following recent leadership shifts and administrative disputes. Before Eid-ul-Azha holidays on May 24, bank's then-chairman M Zubaidur Rahman resigned. Later that evening, former Bangladesh Bank Deputy Governor Md Khurshid Alam was appointed as an independent director and new chairman of the bank. Currently, five independent directors on Islami Bank's board, including the chairman, are central bank appointees. Following these changes, protests broke out under the banner of the "Islami Bank Sachetan Grahak Forum", pressing a seven-point demand that includes the removal of the new chairman. The unfolding situation at Islami Bank also triggered heated debates between treasury and opposition benches in Parliament. Amid growing public discourse, panic withdrawals intensified among clients, prompting Islami Bank to formally seek Tk 10,000 crore in emergency financial assistance from the central bank. Sunday's Tk 2,500 crore fund injection marks the first major deployment to stabilise the institution.

Six financially weak banks, grappling with liquidity crises, have reportedly received a total of Tk 1,640 crore in loans by three stronger banks. Sources at the Bangladesh Bank said that this step is aimed at alleviating the liquidity constraints faced by the country’s weaker banks and restoring some stability to their operations. According to the sources, the support came from Sonali Bank PLC, Mutual Trust Bank PLC, and Dutch-Bangla Bank PLC. The break-up of the amount they received: First Security Islami Bank Tk 375 crore, Social Islami Bank Tk 300 crore, Union Bank Tk 150 crore, Global Islami Bank Tk 95 crore, National Bank PLC Tk 320 crore and Exim Bank PLC Tk 400 crore. On September 25, Bangladesh Bank’s Governor Dr Ahsan H Mansur held a meeting with the Managing Directors and representatives of 10 strong banks to discuss the provision of loans against the central bank’s guarantee to aid the weaker banks. Read: ACC sues ex-chairman of Samabay Bank Mohiuddin Ahmed, wife These banks are Sonali Bank, BRAC Bank, Eastern Bank, City Bank, Shahjalal Islami Bank, Mutual Trust Bank, Pubali Bank, Dhaka Bank, Dutch-Bangla Bank and Bank Asia. The meeting decided that the stronger banks would be able to claim the loan amounts back from Bangladesh Bank within three days, if requested. The interest rates for these loans will be determined based on the prevailing market rates. Bangladesh Bank is hopeful that these measures will help restore confidence and ensure the stability of the banking sector.

Bangladesh Bank on Wednesday disbursed Tk 4000 crore as liquidity support to five Islami banks to meet ongoing liquidity crisis, sources in the central bank said. Five Islami banks had earlier applied to the Bangladesh Bank, seeking liquidity support. They are Islami Bank Bangladesh Limited, Union Bank, Social Islami Bank, First Security Islami Bank and Global Islami Bank. The five banks belong to S. Alam group. Central bank’s spokesperson Mezbaul Haque told UNB that it was decided to pay Tk 4,000 crore against Sukuk bond facility. Read more: Bangladesh Bank curtails banks’ power to waive interest on loans Islami banks can take more money, if required, under Sukuk bond facility, he said. While BB Governor and Managing Directors of five Islami banks have denied the liquidity crisis in their respective banks, the liquidity shortage is still hampering the daily transaction, sources said. On Monday, the Islami Bank Bangladesh Ltd’s  deposits fell to Tk1,46,964 crore. On October 31, the deposit of the bank was Tk1,53,272 crore. Earlier, IBBL had been lending money to all Islami banks for so long. But, IBBL is now going to other banks for money, a deputy managing director of the bank told UNB. After the recent loan scam over Tk34,000 crore, a group of people withdrew their deposits from the bank, which is also another reason for the liquidity crisis, he said preferring anonymity. Read more: Default bank loans surge to record Tk 1.25 lakh crore in Bangladesh: BB In this context, five Islami banks have suddenly faced a liquidity crisis and are struggling to meet demand for regular transactions. Officials say the central bank has taken the special initiative to lend money to these banks to keep them afloat. Bangladesh Bank has launched an investigation to look into the scam. The High Court separately has asked for clarification from S Alam group over the scam.