In a significant move to address the ongoing liquidity crisis in Bangladesh's banking sector, three financially stable banks have extended loan support to their weaker counterparts.
 
This initiative is aimed at bolstering the stability of the financial system, said Bangladesh Bank Spokesperson Husne Ara Shikha on Wednesday.
 
According to the central bank, City Bank, Mutual Trust Bank (MTBL), and Bengal Commercial Bank have collectively provided Tk 945 crore in liquidity support to First Security Islami Bank (FSIBL), Global Islami Bank and National Bank.
 
FSIBL is set to receive some Tk 300 crore, with City Bank, MTBL, and Dutch-Bangla Bank Limited (DBBL) acting as the donating banks.
 
Social Islami Bank Limited (SIBL) will receive a similar amount from City Bank and MTBL.
 
Besides, Global Islami Bank and National Bank have also received their respective allocations from Eastern Bank Limited (EBL) and the previously mentioned donor banks. National Bank has received contributions from City Bank, MTBL and Bengal Commercial Bank.
 
The liquidity injection has been initiated to support these banks in overcoming the ongoing cash crunch. Some banks are still in the process of completing necessary documentation before extending further support to other affected institutions.
 
Ongoing Liquidity Crisis
 
The liquidity crisis in Bangladesh's banking sector has been a growing concern for regulators.
 
On August 11, Bangladesh Bank imposed a limit on cash withdrawals from banks to manage the crisis effectively. However, the restriction was lifted on September 7, yet several banks continue to face liquidity shortfalls.
 
On September 24, Bangladesh Bank published the current accounts of nine private sector banks operating with the central bank, revealing a deficit that had surged to Tk 18,167 crore.
 
The banks listed included First Security Islami, Social Islami, National, Union, Islami Bank Bangladesh, Bangladesh Commerce, Padma, Exim and ICB Islamic Bank.
 
This crisis has prompted swift action from both regulators and financially stable banks, emphasising the need for continued monitoring and targeted support to ensure the stability of the banking sector.