February 8, 2023

Highlights

  • National Bank has been suffering from a severe financial crisis for two years due to a high rate of non-performing loans.
  • It would have to take permission from BB to issue more than Tk10 crore in a loan to a single borrower.
  • The bank’s managing director, Mehmood Husain resigned recently citing ‘personal reasons’.
  • Bangladesh Bank appointed an observer at Islami Bank to curb irregularities in loan disbursement and manage the liquidity crisis.

Gripped with a severe liquidity crisis triggered by irregularities and corruption, private sector lenders Islami Bank, Al-Arafah Islami Bank and National Bank are borrowing money from state-owned Sonali Bank at 9% interest – the highest commercial lending rate at present.

It is a normal practice that when a bank faces a liquidity crisis it borrows from another bank via the interbank money market – where the borrowing cost is lower than the commercial rate. But the liquidity situation in three private sector banks is so critical that they are forced to borrow from another bank at the highest commercial lending rate.

According to the Bangladesh Bank’s guidelines, banks can charge a maximum of 9% interest on all types of loans other than consumer loans such as auto loans and personal loans – in which case the highest lending rate ceiling is 12%.

On 13 December last year, the Sonali Bank board of directors chaired by Ziaul Hasan Siddiqui approved the investment of Tk200 crore in fund placement in favour of Islami…

Read more…

Leave a Reply

Your email address will not be published. Required fields are marked *