Seven Bangladeshi banks received Tk 220 billion in emergency funds from the central bank just before year-end to address balance sheet shortfalls.
Islami Bank, Social Islami, First Security Islami, Global Islami, Union Bank, Padma Bank, and National Bank borrowed the funds for three days at 9.7% interest, using ‘demand promissory notes’ as they lacked collateral.
While providing loans this way is routine, officials say this exceptional support aimed to help the banks meet mandatory cash and liquidity requirements, thereby boosting their year-end appearance and depositor confidence.
Padma Bank took the loan to cover its regulatory cash shortfall. Notably, the Islamic banks (with S Alam Group investment) were not addressing current account deficits, which have long plagued Islami, Social Islami, First Security Islami, Union Bank, and Global Islami. While all but First Security Islami have cleared their deficits, concerns about accountability and depositor protection remain.