Seven banks in liquidity stress get Tk22,000cr from Bangladesh Bank
Banking
The Bangladesh Bank has lent Tk22,000 crore to seven banks facing liquidity crisis.
The central bank lent this money on 28 December to the seven banks as "lender of the last resort" for three days, Bangladesh Bank Spokesperson Mezbaul Haque said, adding the central bank regularly lends to banks.
"Under the Bank Companies Act, banks can lend money through demand promissory notes as well as securities," he said.
Among these seven banks, five are Islamic banks and two are private scheduled banks.
Bankers said these benefits were given to make the bad financial situation look good.
According to the regulations, banks have to deposit bills and bonds to borrow money from the central bank; the central bank cannot lend money without it.
The seven banks do not have usable bills and bonds to borrow money.
According to the information of the central bank, the current account of the five Sharia-based banks has been in deficit for a long time.
For this, some banks in crisis have to borrow money by providing demand promissory notes.
In a letter of undertaking, the banks promised to return the money in any way possible.
An official of Bangladesh Bank told The Business Standard that the seven banks have been lent this money for only three days.
The money is in the banks' account with the central bank, he added.
He also said that the banks have no opportunity to transfer this money.
"The central bank will withdraw money from the fund on 1 January. At the end of the year, the balance sheets of banks would look healthy. However, from January onwards, the banks will face fine for shortage of cash reserve ratio (CRR) and statutory liquidity ratio (SLR).
According to the Bangladesh Bank's policy, a part of the total current and term deposits of each bank has to be deposited with the central bank for the protection of the depositors.
Currently, the rate is 17% for conventional banks and 9.5% for Shariah-based banks.
Fines are imposed if the numbers fall short of the stipulated ones.
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