The Bangladesh Bank will facilitate limited bailouts for crisis-hit eight banks, which were previously under the control of the S Alam Group, through the interbank lending system, BB governor Ahsan H Mansur said on Wednesday.
At a briefing following a meeting with the managing directors of the country鈥檚 commercial banks, Mansur said that the central bank would not print money to fund these bailouts.
Instead, it will provide credit guarantees to reassure other banks to lend to the struggling banks through the interbank money market.
He urged depositors not to be panicked, emphasising that their interests would be safeguarded by the central bank.
The central bank will establish three taskforces to restore the country鈥檚 banking sector, the BB governor said.
He said that a taskforce would work for creating an internationally standard banking sector, another for strengthening the central bank and the third for recovering assets from defaulters.
These taskforces will include both domestic and international experts, he said.
The central bank governor said that it would take two to three years to fully restore the banking sector, but stability should be achieved within a year.
Mansur noted that significant sums were allegedly laundered from the eight banks.
Compensating for these losses would require about Tk 2 lakh crore, which would be unrealistic for the government as it would drive inflation above 25 per cent, he said.
As a temporary measure, well-performing banks will provide limited liquidity to the crisis-hit banks to address immediate depositor demands, he said.
The governor advised depositors to withdraw only what they need, assuring them that the affected banks are expected to recover.
He highlighted that the issues with these banks would not destabilise the entire banking sector.
The sector will remain operational and fundamentally sound, he said.
Mansur also mentioned that all banks would undergo audits, and new operational procedures would be considered.
If necessary, banks could be merged or liquidated, he said.
The governor also stated that large loan defaulters would be held accountable, with their domestic assets seized.
Efforts are underway to recover laundered assets from abroad, in cooperation with the World Bank, the United States and the United Kingdom, he said.
Most of the laundered money is believed to have gone to the UK, Dubai, Singapore and the US, and international collaboration is being sought to retrieve these funds, he said.
Since the political changes on August 5, eight private banks have been freed from controversial S Alam Group鈥檚 grip.
These banks were First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, Islami Bank Bangladesh, Al-Arafah Islami Bank, National Bank and Bangladesh Commerce Bank
These banks have been struggling with liquidity crises due to various issues.
After the meeting with governor, Association of Bankers Bangladesh chairman Selim RF Hussain told reporters that the exchange rate was currently about Tk聽120, and they would operate at this rate.
On the kerb market, the dollar is priced at Tk聽121-122.
鈥楽tability has returned to the dollar market, with expected remittances over $2.5 billion this month,鈥� he said.
鈥楲C openings have slowed due largely to decreased demand. There鈥檚 no shortage of dollars in the market now, and LCs can be opened as needed,鈥� he added.
鈥楬owever, $1.5 billion to $2 billion in payments are stuck in four state-owned banks, which we expect to be resolved within six months,鈥� he said.
The policy rate will continue to rise until inflation is controlled, likely reaching 10 per cent within the next 1-2 months, he said.
