Despite rising interest rates on deposits and various efforts by the central bank, Bangladesh’s banking sector continues to face a liquidity crisis that has hamstrung some lenders.
As crisis-hit lenders have started getting liquidity support from the inter-bank money market, they are now repaying depositors for specific purposes, such as medical emergencies, and in the case of salary disbursement or remittance encashment.
Six banks including four Shariah-based ones are still facing a deficit in their current accounts with the central bank despite special liquidity support.
Islamic banks’ liquidity coverage ratio (LCR) tumbled to 58.7 percent at the end of last year compared to 87.7 percent in 2022 and 188.5 percent in 2021.
ICB Islamic Bank, which took shape from the ruins of Oriental Bank in 2008, is now failing to repay the depositors’ money due to severe liquidity crisis, indicating a vulnerable situation of the lender.
BASIC Bank is experiencing a deep liquidity crunch as depositors have been withdrawing money for weeks following news that the state-run lender is going to be acquired by a private commercial bank.
Although banks in the country normally face a liquidity shortage due to cash withdrawals ahead of Eid-ul-Fitr each year, a majority of them have sufficient funds on hand this time around thanks to continuous liquidity support from Bangladesh Bank.
In a rare move, Padma Bank PLC is going to convert institutional deposits into preference shares and provide them to customers seeking to withdraw funds, exposing how deeper its liquidity crisis is.
Both the government and banks are facing a tight liquidity situation, which has pushed up the yield of treasury bills and bonds and the lending rate in the banking sector
Despite rising interest rates on deposits and various efforts by the central bank, Bangladesh’s banking sector continues to face a liquidity crisis that has hamstrung some lenders.
As crisis-hit lenders have started getting liquidity support from the inter-bank money market, they are now repaying depositors for specific purposes, such as medical emergencies, and in the case of salary disbursement or remittance encashment.
Six banks including four Shariah-based ones are still facing a deficit in their current accounts with the central bank despite special liquidity support.
Islamic banks’ liquidity coverage ratio (LCR) tumbled to 58.7 percent at the end of last year compared to 87.7 percent in 2022 and 188.5 percent in 2021.
ICB Islamic Bank, which took shape from the ruins of Oriental Bank in 2008, is now failing to repay the depositors’ money due to severe liquidity crisis, indicating a vulnerable situation of the lender.
BASIC Bank is experiencing a deep liquidity crunch as depositors have been withdrawing money for weeks following news that the state-run lender is going to be acquired by a private commercial bank.
Although banks in the country normally face a liquidity shortage due to cash withdrawals ahead of Eid-ul-Fitr each year, a majority of them have sufficient funds on hand this time around thanks to continuous liquidity support from Bangladesh Bank.
In a rare move, Padma Bank PLC is going to convert institutional deposits into preference shares and provide them to customers seeking to withdraw funds, exposing how deeper its liquidity crisis is.
Both the government and banks are facing a tight liquidity situation, which has pushed up the yield of treasury bills and bonds and the lending rate in the banking sector
An intensifying liquidity crisis is making a majority of Bangladeshi banks turn to call money market and central bank
