BB will safeguard depositors’ interests

Bangladesh Bank Governor Ahsan H Mansur requested customers to keep calm regarding the crisis plaguing over half a dozen ailing banks, expressing optimism that their situation would turn around soon.

Seven to eight banks are currently contending with a liquidity crisis after thousands of crores were misappropriated through loans and irregularities, Mansur said at a press conference after meeting with bankers at the central bank headquarters yesterday.

He added that those banks would be given liquidity support on a limited scale considering the interests of depositors.

However, he added that help would not be provided by printing money.

"If we want to bail out these banks, around Tk 200,00 crore is needed," he said. "But if we print the money, macroeconomic stability will be destroyed and the exchange rate will surpass Tk 150 per US dollar."

So, the Bangladesh Bank will play the role of guarantor for trouble-hit lenders, allowing them to avail liquidity support or loan facilities from other banks, the central bank governor explained.

"Such banks will get liquidity from the inter-bank money market," he said.

Since Mansur was appointed as governor on August 14, the Bangladesh Bank has reconstituted the boards of Islami Bank Bangladesh, Social Islami Bank, Global Islami Bank, Union Bank, National Bank, First Security Islami Bank, Bangladesh Commerce Bank, Al Arafah Islami Bank, United Commercial Bank, Exim Bank and IFIC Bank.

Most of these lenders were controlled by S Alam Group, a Chattogram-based conglomerate.

In recent weeks, customers have rushed to the branches of cash-strapped banks in a bid to withdraw funds.

However, the Bangladesh Bank governor requested depositors not to withdraw all their money.

"Withdraw as much as you need, but give us some time. We hope the banks will turn around," he said.

Mansur also expressed hope that the distressed banks will overcome the situation as their boards had been reconstituted.

"The quality of the banks will improve as their management will change soon," he said.

"Every bank will be audited. If needed, we will go for mergers and acquisitions of ailing banks," Mansur added.

Turning to loan defaulters, he said that major delinquents would be caught and their assets in the country would be confiscated.

"We are speaking to the World Bank, the United States and the United Kingdom to bring back laundered money," he said, informing that money from Bangladesh had been laundered in Dubai and Singapore as well.

The governor further said that three task forces would be formed to restore good governance in the banking sector.

He informed that bringing the banking sector in line with international standards, strengthening the central bank and asset recovery of loan defaulters would be given priority.

"It will take two-three years for the banking sector to fully recover, but it will be stable within a year," the central bank governor remarked.

After the meeting, Selim RF Hussain, chairman of the Association of Bankers, Bangladesh (ABB) and managing director of BRAC Bank, told journalists that the central bank will form three separate task forces to improve the situation of the banking sector.

Selim also informed that the central bank is likely to increase the policy rate to 10 percent in the next couple of months in a bid to tame inflation.