Three banks seek BB guarantee for Tk 6,800cr liquidity support
National Bank, Islami Bank Bangladesh and Social Islami Bank have applied to the Bangladesh Bank (BB) for its guarantee to avail a total of Tk 6,800 crore in liquidity support through the inter-bank money market for a period of three months.
The restructured National Bank seeks a central bank guarantee for the highest Tk 5,000 crore in liquidity support while Islami Bank Bangladesh requests Tk 1,100 crore and Social Islami Bank wants Tk 700 crore.
For all latest news, follow The Daily Star's Google News channel. A senior official of the central bank told The Daily Star that these three banks have formally applied for a central bank guarantee, but their applications are yet to be approved.
"We will meet with these banks because the application form for the guarantee will be changed after a policy circular in this regard," the official said, requesting anonymity.
These restructured banks applied for the BB guarantee as new central bank Governor Ahsan H Mansur hinted that the banking regulator would manage liquidity for the ailing banks through the inter-bank money market, with the BB acting as their guarantor.
At a recent press conference, the BB governor said the central bank would not provide liquidity support by printing money as before, but lenders could avail such support through inter-bank money supply.
Not only these three lenders, but several other restructured banks, including Union Bank, Global Islami Bank and First Security Islami Bank, are also planning to avail BB guarantees for liquidity support, according to insiders.
After taking charge as the governor of the central bank, economist Mansur dissolved the board and restructured a new one for the troubled National Bank on August 20.
Subsequently, the bank elected Abdul Awal Mintoo, a businessman and vice-chairman of the Bangladesh Nationalist Party (BNP), as chairman of its board of directors.
National Bank has been facing a liquidity crisis for more than a year and applied to the central bank on Tuesday for a BB guarantee.
Touhidul Alam Khan, managing director and CEO of National Bank, told The Daily Star that they had applied for a guarantee to the central bank but had yet to receive approval.
"We have also applied to several banks seeking liquidity support, which have yet to approve," he added.
Islami Bank Bangladesh applied to the central bank on September 9 for a guarantee as the Shariah-based lender sought Tk1,100 crore in liquidity support from the state-run Sonali Bank.
In the application, Islami Bank Managing Director Mohammed Monirul Moula said they were facing liquidity pressure to settle customer obligations due to increased deposit withdrawal tendencies in the banking industry caused by higher inflation, rising living costs and the overall macroeconomic scenario of the country.
"We request you [Bangladesh Bank] to issue a bank guarantee for Tk 1,100 crore in favour of Sonali Bank PLC on our behalf to avail liquidity support for three months from the inter-bank market for the greater interest of the banking industry as well as macroeconomic stability of the country," he wrote.
The Daily Star could not reach Monirul Moula for comment.
Social Islami Bank, another restructured lender, applied to the central bank for a guarantee to avail Tk 700 crore in liquidity support.
When contacted, Mohammad Forkanullah, managing director (acting) of Social Islami Bank, told The Daily Star that they had applied to several banks for liquidity support and that if the banking regulator approved a guarantee, it would help them obtain the necessary liquidity.
Chattagram-based S Alam Group had largely dominated the board of directors at Islami Bank and Social Islami Bank, but the central bank recently removed the group from the boards of the lenders.
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