The Bangladesh Bank has approved an additional Tk 2,500 crore in liquidity support for the crisis-hit Social Islami Bank and First Security Islami Bank to manage the Eid-ul-Fitr withdrawal pressure.
Of this amount, SIBL will receive Tk聽1,500 crore, while FSIBL will get Tk聽1,000 crore 鈥� all financed by printing money.
According to BB officials, banks generally experience heightened withdrawal demands before the Eid holidays.
Given that these two banks are already struggling with a severe liquidity crisis, the central bank opted to provide the funds to safeguard depositors鈥� interests.
This latest injection follows an earlier liquidity support package in November 2024, when Bangladesh Bank provided Tk聽22,500 crore to six troubled banks, including SIBL and FSIBL, to ensure that depositors could withdraw their funds.
Since the political shift on August 5, the total liquidity support provided to these struggling banks has now reached Tk聽29,410 crore 鈥� all financed by printing money.
Initially, BB governor Ahsan H Mansur had strongly opposed providing liquidity to these financially weak banks by printing money.
However, he was forced to reverse his stance following widespread public backlash over the banks鈥� failure to return depositors鈥� money.
Of the previous total Tk 22,500 liquidity assistance, FSIBL has received Tk 5,500 crore, SIBL Tk 4,000 crore, Global Islami Bank Tk 2,000 crore, Union Bank Tk 2,000 crore, EXIM Bank Tk 5,000 crore, and National Bank Tk 4,000 crore.
Apart from EXIM and National Bank, the other four institutions were under the control of the controversial S Alam Group, which allegedly siphoned off large sums from these banks, exacerbating the crisis.
Additionally, Bangladesh Bank provided liquidity guarantees amounting to Tk 6,585 crore to seven banks, including SIBL and FSIBL.
S Alam Group has withdrawn approximately Tk 2.25 lakh crore from ten banks 鈥� including eight directly under its control 鈥� through both names and fake names.
Loans taken by S Alam and other large business groups are turning non-performing, as these entities continue to default on repayment installments.
Therefore, these banks couldn鈥檛 make operational activities smoothly due to fund crisis.
Governor Mansur recently assured depositors that Bangladesh Bank would provide as much liquidity as needed to prevent any shortfall, stressing that depositors鈥� money remains secure.
While money printing raises inflationary risks, the central bank is expected to mitigate the impact by absorbing excess liquidity from banks with surplus funds.
This will be done through government bond issuance to ensure that overall reserve money does not increase and that the contractionary monetary policy remains in effect.