10/16/24, 10:35 PM Two of problem banks get BB recovery tips

Two of problem banks get BB recovery tips

FSIB, BCB seek more liquidity feeding

FE REPORT | Wednesday, 16 October 2024

Two of crisis-ridden commercial banks' new managements were given Tuesday regulatory directions to
improve their financial health through intensifying cash-recovery drives to recoup their soaring non-
performing loans (NPLs).
https://today.thefinancialexpress.com.bd/print/two-of-problem-banks-get-bb-recovery-tips-1729015773 1/3
10/16/24, 10:35 PM Two of problem banks get BB recovery tips

The central bank's instructions came from the Bangladesh Bank Governor, Dr Ahsan H. Mansur, during
parleys with the reconstituted boards of the two commercial banks, sources said.
As part of the BB-launched salvation moves to revitalise those banks of the country which got into
troubles for past wrongs, the BB governor directed the instructions in meeting with the recently
reconstructed boards of First Security Islami Bank (FSIB) and Bangladesh Commerce Bank (BCB) at
the BB headquarters.
Amid severe cash crunch because of mass-scale loan-related irregularities, the central bank dissolved
the then boards of the FSIB and BCB on September 01 and September 03 respectively before the
reconstitution-as banking-sector reforms get going under the interim government.
During the meeting, the BB high-ups wanted to know the revival plans of the respective banks from the
board members regarding deposit buildup, corporate governance and cash-recovery activities of the
underperforming credits.
And board members of the respective commercial lenders shared their short-term, mid-term and long-
term plans regarding their turnaround on all major financial indicators with the BB high-ups in the
meeting, sources at the parleys said.
Talking to the FE, spokesperson for the central bank Husne Ara Shikha said the BB asked the two banks
to improve their financial health immediately.
"We've also asked the banks to boost deposit portfolio with geared-up recovery drives to cut down NPs
burdens," said Ms Shikha, also an executive director of the BB.
At the meetings, the banks also sought more liquidity support from the BB to run their day-to-day
banking affairs during this critical period of time, according to the spokesperson.
When contacted, chairman of FSIB Mohammad Abdul Mannan said they shared the plans in detail with
the central bank governor as to how they revive the unconventional bank towards a stable and stronger
bank in respect of all major financial indicators in the next three years.
Sharing some of their plans, Mr Mannan said they aspired to increase the deposit accounts to 7.5
million by 2026 from the existing 3.0 million. It would cross 10-million mark by the end of 2027.
As part of the bail-in plan, he said, they want to see the bank one of the top five remittance-sourcing
banks by 2026. To achieve the targets, they morally upped their entire manpower and engaged them to
this end.
"In just one-and-a-half-month time of taking charge of the bank, we managed to open 100,000 deposit
accounts and collected deposits amounting to Tk 7.0 billion," the experienced banker said about their
redemption process so far.
At the same time, he said, they give utmost priority to cash-recovery drives that helped recover over Tk
6.0 billion during this period.
"We want to turn the bank into a strong one through converting the weakness to the strength. We will do
it inshallah," he said on swearing over their mission.
Growing NPL buildup over the years puts the banks in serious liquidity dearth, which prompted the
banking regulator to intervene to protect the interests of depositors.
FSIB's total outstanding of classified loans rose to Tk 26.90 billion until June last from Tk 19.87 billion
recorded in June 2023 while BCB's overall classified loans climbed to Tk 13.32 billion in June 2024
from Tk 11.58 billion registered a year ago.

siddique.islam@gmail.com, jubairfe1980@gmail.com

Editor : Shamsul Huq Zahid

Published by Syed Manzur Elahi for International Publications Limited from Tropicana Tower (4th floor), 45,
Topkhana Road, GPO Box : 2526 Dhaka- 1000 and printed by him The Transcraft Limited, 229, Tejgaon Industrial
Area, Dhaka-1208.

Telephone : PABX : 9553550 (Hunting), 9513814, 7172017 and 7172012 Fax : 880-2-9567049

Email : editor@thefinancialexpress.com.bd, fexpress68@gmail.com

https://today.thefinancialexpress.com.bd/print/two-of-problem-banks-get-bb-recovery-tips-1729015773 2/3
10/16/24, 10:35 PM Two of problem banks get BB recovery tips

Print

https://today.thefinancialexpress.com.bd/print/two-of-problem-banks-get-bb-recovery-tips-1729015773 3/3
10/16/24, 10:24 PM Banks hit by liquidity crunch: Limited cash withdrawals spark nationwide frustration | The Financial Express
TRADE 10 days ago

Banks hit by liquidity crunch: Limited cash withdrawals spark nationwide frustration
UNB

Published : Updated :
Oct 06, 2024 18:15 Oct 06, 2024 18:15

For all latest news, follow The Financial Express Google News channel.
Alauddin, a middle-aged migrant worker who recently returned from Saudi Arabia, faced a shocking reality last
Thursday when he attempted to withdraw Tk 50,000 from the Bashabo branch of First Security Islami Bank
(FSIB). Desperate to secure the funds for his father's medical treatment at Lakshmipur District Sadar Hospital,
Alauddin was o ered just Tk 5,000 by the bank.

A er explaining the urgency of his situation, he managed to persuade bank o icials to increase the
disbursement, but they only agreed to provide Tk 10,000, citing a severe liquidity crisis.

“I told them itʼs for my fatherʼs treatment, but they said the bank is struggling with cash flow and couldnʼt o er
more,” Alauddin shared, visibly frustrated. “How am I supposed to cover these expenses?”

The issue is not isolated. Similar incidents have been reported across the country. UNB news agency learned
that both FSIB and National Bankʼs branches in Tangail saw gatherings of customers last Wednesday and
Thursday, with many walking away disappointed a er being o ered only Tk 5,000 to Tk 10,000 per transaction,
regardless of their withdrawal amounts.

Senior FSIB o icials, speaking to UNB news agency, acknowledged the crisis, explaining that banks are facing
unprecedented liquidity shortages due to a rush of withdrawals as customers scramble to meet their expenses.
Customers were asked to withdraw smaller amounts gradually, said one o icial.

Muhammad Abdul Mannan, Chairman of FSIB, confirmed the challenges but assured that steps were being
taken. “We have signed an agreement with Bangladesh Bank to secure Tk 3 billion (Tk 300 crore) this week to
meet emergency demands. Additionally, FSIB has gathered Tk 4.5 billion (Tk 450 crore) from its investments to
address the shortage,” he said.

Mannan pointed out that the central bank had guaranteed inter-bank loans to ensure liquidity in the short term.
“It is a regular system in the banking sector, which was hampered due to various bad practices during the last
government in the country,” said Mannan, who is also vice president of Bangladesh Association of Banks (BAB).

Abdul Awal Mintoo, Chairman of National Bank Limited (NBL), echoed similar concerns, blaming Bangladesh
Bankʼs lack of regulation for the financial distress. National Bank has always maintained a solid reputation, but
in recent years, it faced serious issues due to poor oversight by the central bank, he said, adding now, itʼs their
responsibility to step in and fix the liquidity shortage.

https://thefinancialexpress.com.bd/trade/banks-hit-by-liquidity-crunch-limited-cash-withdrawals-spark-nationwide-frustration 1/3
10/16/24, 10:24 PM Banks hit by liquidity crunch: Limited cash withdrawals spark nationwide frustration | The Financial Express

Depositors are now feeling the brunt of the massive loans taken by companies like S Alam and Sikder Group,
which have crippled banks a er these groups failed to return the borrowed funds. With the regime change in
Bangladesh, many of these individuals have gone into hiding or fled the country, leaving banks in dire financial
straits.

The Bangladesh Bank has already restructured the boards of 11 banks in response to the crisis and imposed
restrictions on the sale of assets linked to S Alam and Sikder Group. These assets may be sold to recover the
defaulted loans, Bangladesh Bank Governor Dr Ahsan H Mansur said, adding that the government will ensure
that depositorsʼ money is safe.

Across Bangladeshʼs 61 banks, covering over 11,000 branches, many are grappling with a significant cash
crunch. According to central bank sources, the flow of money in the market has been reduced somewhat due to
the contractionary monetary policy.

Unrest in recent months, sparked by student protests and political upheaval, has further exacerbated the issue.
At that time, banking activities were severely disrupted, leading to widespread delays in cash transfers and a
backlog of transactions.
Share this news

Ad google.com More ▼

https://thefinancialexpress.com.bd/trade/banks-hit-by-liquidity-crunch-limited-cash-withdrawals-spark-nationwide-frustration 2/3
10/16/24, 10:24 PM Banks hit by liquidity crunch: Limited cash withdrawals spark nationwide frustration | The Financial Express

Ad google.com More ▼

https://thefinancialexpress.com.bd/trade/banks-hit-by-liquidity-crunch-limited-cash-withdrawals-spark-nationwide-frustration 3/3
FSIBL customers,
employees scuffle
for cash shortage
The bank's Dilkusha branch could give
only Tk , each who went to withdraw
money

Photo: Star

A scu e broke out today between

customers and employees at the
Dilkusha branch of First Security
Islami Bank PLC (FSIBL), centring a
cash crisis in the outlet of the Shariah-
based lender.

The confrontation occurred around

am following a heated exchange
between branch sta and frustrated
customers, who were unable to
withdraw money of desired amounts.
The situation was brought under
control with the intervention of senior
bank o cials and some customers. No
one was seriously injured in the
incident, according to witnesses.

Tabassum Hussain Tanuza, a dental

surgeon and FSIBL customer, alleged
that she was physically assaulted by
bank sta when she attempted to
intervene in a dispute between
another customer and the employees.

Read more

Four lenders get Tk

crore liquidity support
from ve other banks

Tanuza, who holds a salary account

with the Banashree sub-branch, said
that she and several other customers
were asked to go to the Dilkusha
branch after the Banashree branch
was unable to entertain their cash
withdrawal requests.
"We arrived at the Dilkusha branch at
around : am and requested to
withdraw our required amounts, but
the sta told us that they could only
provide Tk , . When we questioned
them further, the situation escalated,"
she said.

Tanuza also claimed that some sta

members were recording and making
video footage of the incident, and
when a customer tried to stop them,
some employees assaulted her. "I was
assaulted while trying to protect the
customers," she added.

Branch o cials, however, denied the

allegations, saying that the altercation
escalated while they were trying to
calm the situation.

Read more
10/16/24, 10:42 PM about:blank

Some banks’ liquidity crisis signals alarms

Published : Saturday, 21 September, 2024 at 12:00 AM Count : 361
The liquidity crisis affecting five banks in Bangladesh has raised alarms across the
financial landscape, revealing underlying vulnerabilities exacerbated by political
turmoil. With Bangladesh Bank stepping in to provide interbank loans, the immediate crisis may be
mitigated, but deeper structural issues remain unaddressed.

Following the recent governmental shift, the stability of several banks-particularly those previously
controlled by the S Alam Group-has been thrown into disarray. The abrupt dissolution of boards and
the imposition of new governance structures have left these banks in a precarious position, struggling
to meet customer demands for withdrawals. The central bank's decision to act as a guarantor for
interbank loans offers a temporary lifeline, yet it raises questions about the long-term health of these
institutions.

Bangladesh Bank's move to allow liquidity support is undoubtedly necessary, especially for the
National Bank, Social Islami Bank, First Security Islami Bank, Union Bank, and Global Islami Bank.
However, this intervention should not mask the systemic issues that have plagued these banks for
years. Reports of irregularities and mismanagement have fostered a climate of distrust among
depositors. When confidence falters, as seen in these banks, customers withdraw their funds, further
exacerbating the crisis.

The newly appointed Bangladesh Bank Governor, Ahsan H Mansur, has recognized the gravity of the
situation. His directive to facilitate interbank borrowing is a prudent step, but it must be accompanied
by a robust strategy to restore public trust. Without addressing the root causes of the liquidity crisis-
namely, governance failures and allegations of corruption-any temporary fixes may simply delay the
inevitable reckoning.

Moreover, the crisis is not limited to these five banks. Other institutions are also feeling the pinch,
with several seeking special loans. This broader liquidity shortage indicates a systemic issue that could
affect the entire banking sector if not managed effectively. The comments from Bangladesh
Association of Banks Chairman Abdul Hai Sarker highlight a crucial point: some banks are suffering
due to political sanctioning rather than operational inefficiency. This distinction is vital as it
underscores the need for a transparent and fair banking environment, free from political interference.

As the central bank navigates this turbulent landscape, a comprehensive approach is required. Efforts
must include not only immediate liquidity support but also long-term reforms to enhance governance,
accountability, and operational transparency within the banking sector. Building a culture of trust is
essential; without it, depositors will remain hesitant to engage with these institutions.

about:blank 1/2
10/16/24, 10:42 PM about:blank

While the Bangladesh Bank's intervention offers temporary relief, it is imperative that we view this
crisis as a call to action. Addressing the foundational issues within our banking system is crucial for
sustainable recovery. The financial health of our economy depends on a resilient banking sector that
can inspire confidence and foster growth. Only through diligent reform and oversight can we ensure
that such a crisis does not become a recurring theme in our financial narrative.

Editor : Iqbal Sobhan Chowdhury

Aziz Bhaban (2nd floor), 93, Motijheel C/A, Dhaka-1000
Phone: PABX 9586651-58; Online: 9513959; Advertisement: 9513663
E-mail: info@dailyobserverbd.com, online@dailyobserverbd.com, news@dailyobserverbd.com

about:blank 2/2