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The Bangladesh Bank on Sunday raised the deposit insurance limit to Tk 2 lakh, as some banks in the country are on the verge of bankruptcy, but the government are making efforts to save them and protect depositors, said central bank governor Ahsan H Mansur.

Speaking at a press briefing at the BB’s head office in the capital Dhaka, Mansur said, ‘While we hope no banks go bankrupt, the reality is that 10 banks are in severe financial distress, and the government is working to stabilise them.’

The increase in the deposit insurance limit, from Tk 1 lakh to Tk 2 lakh, will ensure the safety of deposits for about 95 per cent of account holders, he said.

‘No country can guarantee 100 per cent protection for all depositors, and neither can we,’ said Mansur.

‘However, if a bank collapses, small depositors will be reimbursed promptly, so there is no need to be panicked.’

BB data shows that there are currently 15.71 crore bank accounts in the country.

Of these, 14.71 crore accounts hold Tk 2 lakh or less, this covered 95 per cent of depositors.

The BB has already restructured boards of eight banks, which were previously under the control of controversial S Alam Group and now are in most vulnerable situation.

Mansur added that reforms in the banking sector were underway, with some improvements visible.

‘Our priority is to rebuild depositor confidence.’

On freezing bank accounts, Mansur clarified that BB had not frozen any company’s accounts, even if there were irregularities.

Institutional accounts remain active to ensure uninterrupted business operations, he said.

Mansur observed that significant progress has been made in forming a taskforce, and it is expected to start working within the next 10 days.

The taskforce will assess the health of banks based on these reports, he said.

The Asian Development Bank will assist in preparing forensic reports for the banks.

Currently, daily transactions of banks are being monitored, and regular cash flow checks are in place, Mansur said.

Addressing the slowdown in microloan distribution, the governor said, the BB has Tk 25,000 crore, but it was not being distributed, indicating procedural flaws.

‘Loans won’t be distributed under overly strict conditions; we need flexible policies. We will ensure that small entrepreneurs can access loans,’ he said.

In response to a question, he mentioned that policies favouring influential individuals would be reviewed.

If it is found that they were designed for the benefit of just 10 or 20 people, those policies will be annulled, he said.

He also noted that if necessary, the Bank Company Act will be amended to break the banking sector’s oligarchic tendencies, though this will be done later, as laws cannot be changed frequently.

In response to a question about S Alam’s assets, Mansur said, ‘Anyone purchasing these assets must do so at their own risk. The central bank will not assume any responsibility in this matter.’