Report: The nation’s banking sector is in disarray.
Bangladesh is presently grappling with a significant economic downturn. Bangladesh Bank Liquidity Crisis
According to recent data, 12 commercial banks in the country have not been able to repay a total of Tk 68,250 crore from the central bank despite borrowing from it. This is a terrible Bangladesh Bank liquidity crisis. It has created deep concern among the common people of the country and in the financial sector. These banks, which were victims of systematic looting during the previous Awami League government, are now on the verge of bankruptcy.
Political influence behind the crisis
The root of this crisis lies in the irregularities and corruption of the last decade. During the Sheikh Hasina government, thousands of crores of taka were withdrawn from more than a dozen banks. In particular, some politically influential groups, including the S. Alam Group, were directly involved in this looting. As a result, banks are struggling to return the deposits of ordinary customers. As a direct result of this situation, today we have a Bangladesh Bank liquidity crisis, I see.
Trying to save the bank by printing money
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Attempts to keep these banks alive artificially began during the time of former Governor Abdur Rouf Talukder. Towards the end of the Awami League period, around Tk 17,250 crore was printed and lent to the banks. Then, when the interim government took charge, the new governor, Dr. Ahsan H. Mansur, initially announced stopping the printing of money. But to avoid the overflow of customers and possible chaos in the banks, he was forced to lend another Tk 51,000 crore. This huge amount of money flow was Bangladesh Bank’s liquidity crisis. It was a desperate attempt to cut through.
List of 12 banks that received loans
According to the central bank, the list of banks that have failed to repay loans is quite long. These include:
1. First Security Islami Bank (Tk 15,810 crore)
2. Exim Bank (Tk 12,010 crore)
3. Social Islami Bank (Tk 10,841 crore)
4. National Bank (Tk 10,568 crore)
5. Union Bank (Tk 5,420 crore)
6. Premier Bank (Tk 5,000 crore)
7. AB Bank (Tk 4,270 crore)
8. Global Islami Bank (Tk 3,003 crore)
9. Bangladesh Commerce Bank (Tk 624 crore)
10. ICB Islamic Bank (Tk 252 crore)
11. Padma Bank (Tk 252 crore)
12. Basic Bank (Tk. 195 crore)
Each of these banks is currently in deep crisis and this long list proves that the Bangladesh Bank liquidity crisis How terrible it has become.
Legal framework and overnight-OD facilities
As per Sections 16(4)(d) and 17(1)(b) of the Bangladesh Bank Order, these loans were given for a period of 90 days. In banking terminology, this is called an ‘overnight OD’ facility. However, the financial condition of the banks is so deplorable that even after a year, they have not been able to repay this money. This long-term default situation is the overall Bangladesh Bank liquidity crisis. Who made it more concentrated?
Impact on inflation
According to economists, this printing of money to provide money to banks has led to extreme inflation in the market. When excess money is released into the market and production or services do not increase in return, the value of money decreases and the prices of daily necessities increase. This is one of the main reasons why the common people are confused by the rising prices of commodities today. Bangladesh Bank liquidity crisis Wrong way to handle.
Expert opinion
Mostafa K. Mujeri, former chief economist of Bangladesh Bank, believes that banks have now lost the strength to stand on their own two feet. He likens the situation to a deep infection, where only temporary support will not help. According to him, until the laundered money is recovered, Bangladesh Bank liquidity crisis It is not possible to escape from. For more detailed information on this and the country’s economic news, you can go to Prothom-alo. You can read its regular
reports.
The destruction of the uncontrolled S Alam Group and the banking sector
During the previous government, S Alam Group alone took control of five banks. Loans were taken from the banks anonymously and smuggled abroad. As a result, the vaults of the banks became empty. Even after S. Alam was released, these banks have not yet been able to return to normal. This anarchy in the banking sector is basically what it is today. The Bangladesh Bank liquidity crisis made.
Future plans and reforms
The new governor, Dr. Ahsan H. Mansoor, has taken some steps to reform the banking sector after taking charge. However, the biggest challenge now is to restore the confidence of the customers. If the customers panic and start withdrawing all their money, the situation will get out of control. Therefore, the central bank has to be very careful in this regard. Bangladesh Bank liquidity crisis to have to deal with.
This wound in Bangladesh’s banking sector did not develop overnight, so it is not possible to cure it quickly. While banks can be temporarily saved by printing money, a long-term solution requires strict legal measures and recovery of looted money.
MKSS News is always committed to the security of deposits of the common man and to portraying an accurate picture of the country’s economy. We hope that the government will take effective steps to address this issue quickly. Bangladesh Bank liquidity crisis The solution will be successful.