Bangladesh Bank reduced the special liquidity support to nine banks including five Shariah-based banks, at a time when the central bank suffered relentless troubles amid tension at top leadership level.
The banks are National Bank, Padma Bank, ICB Islamic Bank, and six others in which S Alam Group holds a majority stake such as Islami Bank Bangladesh, First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank and Bangladesh Commerce Bank.
All nine banks are long been battling a liquidity crisis and they have been running operations by utilising the central bank's special liquidity support, BB data shows.
On August 12, the central bank instructed all banks not to honour cheques worth more than Tk 1 crore of the nine banks. As a result, depositors and borrowers of those banks will not be able to withdraw more than Tk 1 crore from other banks.
However, they can withdraw more than Tk 1 crore from the bank that issued the cheque, said a senior official of the central bank on condition of anonymity.
He said the central bank took the initiative to reduce the burden of special liquidity support.
The banking regulator provides special liquidity support to ailing banks against promissory notes, a legal instrument under which one party promises in writing to pay a sum of money to the other, he pointed out.
Due to the liquidity crunch, a majority of the nine banks have been facing current account shortfalls with the central bank.
Till May 12, seven of the banks, excluding ICB Islami Bank and Padma Bank, were staring at a combined Tk 30,202 crore deficit in their current accounts and CRR (cash reserve ratio) accounts with the central bank, BB data showed.
A central bank official said since depositors and borrowers of these banks will not be able to withdraw large amounts of money, they will require less liquidity support.
It was learned that the banks were getting special liquidity support from the central bank with the help of Bangladesh Bank governor Abdur Rouf Talukder.
A few months ago, when asked why liquidity support was continually provided to these banks, Talukder told journalists that it was done at the governor's discretion.
Talukder resigned from his post on August 9, four days after the fall of the Sheikh Hasina-led Awami League government in the face of a mass uprising.
