The Bangladesh Bank on Monday asked stronger banks to provide more liquidity support to weaker banks which are struggling in repaying depositors’ money.
He also warned of strict action against banks delaying payments against letters of credit.
On Monday, BB governor Ahsan H Mansur held a meeting with representatives of 17 banks and in the meeting these issues were addressed, said Bangladesh Bank executive director and spokesperson Husne Ara Shikha.
The 17 banks are state-run banks — Sonali Bank, Rupali Bank, Agrani Bank and Janata Bank — and private sector banks — BRAC Bank, Mutual Trust Bank, City Bank, Dhaka Bank, Dutch-Bangla Bank, Eastern Bank, Pubali Bank, Prime Bank, NCC Bank, Mercantile Bank, Premier Bank, Jamuna Bank and Southeast Bank.
The meeting also covered dollar market, condition of weaker banks, credit card rates, write-off policies, dividend giving capacity and mandatory diploma examination for bankers.
Husne Ara said that the governor urged banks with strong liquidity to provide additional support to banks in crisis.
Some banks failed to repay LC payments to foreign clients, which became a reputation crisis for the country and created difficulties for others, she said.
‘Any future delays in LC payments will result in administrative action, and such banks will be restricted from opening new LCs,’ she said quoting the BB governor.
The governor also said that banks should avoid manipulating the dollar market, holding dollars to sell at higher prices or profiting by cross-currency transfers.
The private bank officials attending the meeting requested permission to raise credit card interest rates, claiming that the current rates do not cover operational costs.
They also sought changes in the write-off policy, suggesting immediate lawsuits after write-offs rather than waiting for two years.
Following the fall of the Awami League government, the Bangladesh Bank restructured the boards of troubled banks which were plagued by irregularities and corruption.
Since August 20, the central bank has changed the boards of 11 banks, with eight still facing liquidity issues.
Six banks are in such dire condition that many of their branches have nearly ceased cash transactions.
Branch managers and other officials are frequently confronting challenging situations due to pressure from depositors.
To address the situation, the Bangladesh Bank has been arranging liquidity for weaker banks from stronger ones through the interbank market, with the Bangladesh Bank providing guarantees on behalf of the troubled banks.
Over the past one and a half months, a number of strong banks provided Tk 5,585 crore in liquidity assistances to these banks.
