Dhaka, Bangladesh (BBN) - The deficit in the current accounts of nine private commercial banks maintained with the central bank has exceeded BDT 180 billion.
National Bank has a current account deficit of over BDT 23.42 billion, First Security Islami Bank BDT 72.69 billion, Social Islami Bank BDT 33.94 billon, Union Bank BDT 2,2.09 billion, Commerce Bank BDT 3.80 billion, Global Islami Bank BDT 0.39 billion, Islami Bank Bangladesh BDT 22.01 billion, Padma Bank BDT 2.34 billion and ICB Islami Bank BDT 0.95 billion.
Of them, five commercial banks out of nine have obtained a central bank guarantee to avail liquidity support from the inter-bank money market.
The cash-hungry five - National Bank, First Security Islami Bank, Global Islami Bank, Social Islami Bank and Union Bank - recently signed agreements with the Bangladesh Bank on obtaining its nod to playing guarantor for the banks in failure of repaying the credits borrowed from the banks having surplus liquidity.
But the fact remains that none of the banks has received a single penny from the compliant commercial lenders which do not find lending to the problem banks sustainable for their banking despite the guarantee by the regulator.
The banks having excess funds are yet to feel encouraged to lend to the five weaklings. As a matter of fact, no transaction has taken place yet under the guarantee mechanism, according to a central banker.
The BB official also said the five banks with the help of the central bank very recently managed to convince management of a few state-owned commercial banks but the effort went in vain when the government cancelled the contractual jobs of the top management of the public banks.
"We're facing difficulties to run our bank as no banks have yet responded positively to provide liquidity support to us," Md. Touhidul Alam Khan, managing director (MD) and chief executive officer (CEO) of National Bank, told media.
He also said his bank had already approached more than 15 scheduled banks for liquidity bailout even after obtaining a guarantee from the Bangladesh Bank last Thursday.
Like the National Bank, the other four banks - First Security Islami Bank, Global Islami Bank, Social Islami Bank and Union Bank - have obtained similar guarantees from the central bank on the same grounds.
The central bank is now assessing liquidity requirements of two other banks -Islami Bank and Exim Bank -considering their overall financial health.
Meanwhile, the central bank has imposed nine conditions that include that liquidity support will be maximum for one year on a three-month basis, interest rate will be fixed at 10.50 per cent equivalent to the existing level of special liquidity facility (SLF) rate in the agreements with the five commercial banks.
In case of a failure to repay by the crisis-hit banks, the liquidity-providing banks can create 90 days' tenure of forced loans in the name of the borrowing banks.
The central bank will be empowered to deduct funds from the concerned banks' current accounts with the BB in case of failure to repay the loans on time, as per the agreement.
An additional 2.0-percent interest or profit will be imposed on the SLF rate if the loans are not repaid on time, the agreement says.
If the BB fails to recover funds from the borrowers' current accounts, it will recover cash by selling the bank's permanent assets, bonds and other securities.
BBN/SSR/AD