Bangladesh Bank (BB) on Wednesday facilitated the transfer of Tk9.5 billion in liquidity support to several weak banks.
Under the central bank's policy to bolster weaker financial institutions without printing money, stronger banks provided excess liquidity through inter-bank support.
The First Security Islami Bank Limited (FSIBL) is to receive Tk3 billion from City Bank, Mutual Trust Bank Limited (MTBL) and Dutch-Bangla Bank Limited (DBBL), according to Bangladesh Bank spokesperson Husne Ara Shikha.
Similarly, Social Islami Bank Limited (SIBL) obtained almost the same amount from City Bank and MTBL.
Global Islami Bank and National Bank also secured their required funds from Eastern Bank Limited (EBL) and other supporting banks. National Bank, in particular, received assistance from City Bank, MTBL and Bengal Commercial Bank.
In total Tk9.5 billion will be injected into the system to stabilise the weaker banks, with more banks expected to join the support program once documentation is finalized.
When talking with the Daily Observer a senior official in the BB said, "We are ensuring macroeconomic stability by using inter-bank liquidity support instead of printing high-powered money,"
He said, "This approach helps strengthen weaker banks without fueling inflation or burdening our resources."
"We are supporting the stability of the financial sector by providing liquidity to weaker banks," said a senior executive from City Bank.
"This system benefits the entire banking ecosystem, allowing weaker institutions to meet their needs without risking the overall stability", he said.
