As of now, the deficit of 9 private sector banks operating with Bangladesh Bank has increased to Tk 18 thousand 167 crores.
For the first time, the Central Bank Spokesperson’s Office has officially disclosed the current account deficit information to the media. Banks in deficit are First Security Islami, Social Islami, National, Union, Islami Bank Bangladesh, Bangladesh Commerce, Padma and ICB Islamic Bank. Although seven banks have been running deficit for quite some time, Padma and ICB Islamic Bank have been newly added.
Those concerned said that there is concern about the banking sector among the depositors due to various reasons. Due to the pressure of withdrawing money, many people are now unable to withdraw money from different banks as required.
Unpleasant incidents are constantly happening in various bank branches. A section of depositors are withdrawing money and keeping it with themselves. Others are withdrawing money from banks known as weak banks and putting them in relatively good banks.
In order to cope with the situation, some banks are trying to borrow from other banks against the guarantee of the central bank. So far Bangladesh Bank has given guarantee to five banks but others are not agreeing to lend to these banks.
Central bank officials said that each bank has a current account with Bangladesh Bank’s Motijheel office. From this account the bank has to keep CRR as statutory cash liquidity reserve and SLR as government securities. Again, all transactions including settlement of inter-bank transactions and refinancing from the central bank are done from this account. Generally, there should be a deficit in CRR and SLR but not a current account deficit.
However, former governor Abdur Rauf Talukdar gave this special opportunity after the banks, which were controlled by the controversial S Alam Group, ran out of loanable funds. At the end of 2022, the current account of five Shariah-based banks was made negative and this new way of transaction was taken out.
The amount of current account deficit means that the banks owe that amount to the central bank. This situation is created due to various weaknesses including liquidity crisis and fund management problems of the bank.
Bangladesh Bank’s Motijheel office warned five banks in November last year that if the current account deficit is not met by December 26 of that year, transactions with other banks will be stopped.
After the publication of reports in several media, the Central Bank held a press conference and said that the final decision to stop the transactions of these banks has not been made. After that, the central bank gave special loans without any collateral on the last working day of the year, December 28, to make the annual report of the banks look good.
A total of 22 thousand crore rupees were given to 9 banks including Panch Islami on that day. Earlier, on the last working day of 2022, the central bank paid Tk 13,790 crore as ‘lender of the last resort’ to five Islamic banks.
According to Bangladesh Bank, First Security Islami Bank had the largest deficit on September 18. The deficit of the bank stands at 7 thousand 270 crores. Social Islami Bank, which is second in the list of deficits, has a deficit of Tk 3 thousand 394 crores. The deficit of National Bank is Tk 2 thousand 342 crores. Apart from this, there is a deficit of 2 thousand 209 crores in Union Bank, 2 thousand 202 crores in Islami Bank Bangladesh, 381 crores in Bangladesh Commerce Bank, 234 crores in Padma and 96 crores in ICB Islamic Bank.
However, after the formation of the interim government, after Ahsan H Mansoor took over as the governor of Bangladesh Bank, illegal transactions are no longer being allowed. Due to which the inter-bank transactions of the deficit banks are closed.