Four more shariah-based banks have been found to have taken emergency funds, which are usually taken during extraordinary circumstances, in an attempt at dressing up their balance sheet for last year.

Named "lender of the last resort", the facility has allowed the banks to borrow from Bangladesh Bank (BB) at 8.75 per cent interest.

The four -- First Security Islami Bank, Social Islami Bank, Union Bank and Global Islami Bank -- took Tk 6,790 crore on December 29.

Earlier, information could be availed of Islamic Bank Bangladesh, the country's top largest private lender in terms of deposit and credit, having taken Tk 8,000 crore under the arrangement on the same day.

This means the five collectively took Tk 14,790 crore from the BB.

In practice, shariah-based banks do not borrow money by offering interest, rather they provide "profits" on the amount.

But the five banks have been forced to do so owing to their cash reserve ratio (CRR) falling short of the central bank-stipulated rate for an acute liquidity crisis.

The CRR is a portion of the bank's deposits that it must keep with the central bank in cash to protect depositors' interests. In Bangladesh, the CRR is 4 per cent.

The collective shortfall of the five banks stood at Tk 8,133 crore on December 28.

In exchange for the funds, the lenders presented a "demand promissory note", which is a legal instrument in which the issuer guarantees to pay a specific sum of money within an agreed time.

The BB usually accepts a demand promissory note when any bank does not have available bills and bonds to provide as collateral.

"The central bank is considered the lender of the last resort, which is why it provided the funds to the banks due to their CRR shortfall," said Md Mezbaul Haque, spokesperson of Bangladesh Bank.

Shariah principles do not allow Islamic banks to use most of the traditional windows of the central bank for availing funds, which is why the lenders have taken the fund under the arrangement of the lender of the last resort.

The lenders repaid the funds on January 1 as the repayment tenure is overnight, he added.

"If the banks show a CRR shortfall on their annual balance sheets at the end of the year, depositors' confidence on the banks will erode further," according to BB documents.

A Bangladesh Bank official, on condition of anonymity due to the sensitivity of the matter, said a bank rarely uses the window to take funds from the central bank.

Contacted, Syed Habib Hasnat, managing director of Global Islami Bank, said the lender had taken the fund for a night in order to keep its balance sheet strong at the end of the year.

"We do not have any major problem. And the financial health of the bank is quite good," he said.

Managing directors of the three other banks, however, did not respond to The Daily Star's requests for comment.

Islami Bank Bangladesh took the highest amount from the emergency funds, followed by First Security Islami Bank (Tk 3,125 crore), Social Islami Bank (Tk 1,500 crore), Union Bank (Tk 1,465 crore) and Global Islami Bank (Tk 700 crore), according to the BB documents.

The central bank is investigating allegations of gross irregularities at Islami Bank Bangladesh over the disbursement of loans amounting to Tk 7,246 crore among nine companies last year.

Reports about the investigation's initiation led to a confidence crisis of depositors of the five banks, all of which have Chattogram-based business conglomerate S Alam Group well-represented in their boards.

This compelled the five to take liquidity support of Tk 5,250 crore from the BB last month under another "Islamic Bank Liquidity Facility".