Six cash-hungry banks have been fed with Tk 225 billion in a regulatory somersault over a moratorium on printed-money circulation, in a last resort for banking rescue, the central bank disclosed Thursday.
Bangladesh Bank (BB) Governor Dr Ahsan H. Mansur said he "temporarily backtracks" on his stance halting 'high-powered money' injection into the liquidity-scant commercial banks.
Following the paradigm shift on part of the banking regulator, the BB has injected direct liquidity supports amounting to Tk 225 billion over the last few days into six struggling banks to meet depositors' fund obligation amid cash crunch.
The six cash-fed commercial lenders are National Bank, First Security Islami Bank, Social Islami Bank, EXIM Bank, Union Bank and Global Islami Bank.
"We backtracked on our previous decision of not injecting print money temporarily, not completely," the governor told a press briefing on the cash supports to the banks in need, held at the BB headquarters where chairmen of the six banks were present.
The regulator's money-sterilising move to mop up a splurge of money on the market, in order to stem the tide of inflation, the governor said they would also offset the same amount of the high-powered money used for revitalising the weak banks through issuing various types of BB bills in the coming days so that the net circulation remains under control.
"I hope the liquidity supports will be enough in enabling the banks to meet the depositors' needs. If not, we will be continuing such supports because our prime objective is to ensure full protection of the depositors," he said.
"Please be assured that your money is well-protected-it is our headache and we will solve the problem," the governor said in his words directed towards the depositors.
He said they started getting positive impact from the market after the liquidity feeding as depositors started getting their money back from the counters of branches of the banks.
"I think you will not find depositors coming from the bank branch without getting money from Sunday next," Mr Mansur said, requesting the depositors not to go to the bank all together that will not be possible to handle for any good bank in the world.
Responding to a question, the governor said there are fundamental changes of injecting print money now and by earlier regime. They dissolved boards of the non-performing banks and kept monitoring their performance indicators regularly by constantly asking the bank executives to improve their situation.
But in the earlier regime, he said, there was no accountability at any stage and banks kept getting funds on demand like 'a son demand lollypop from his father'. "That's why we did not see any improvement. So the fundamental difference is the governance."
His attention drawn to the latest loan classification-and provisioning-related circular, the governor said they have no intention to show the extent of classified loan as low as possible, through window dressing.
He said the ratio of NPL (non-performing loan) rose to around 17 per cent as of September last and it might cross even 25 per cent in the coming days with the latest change in the master circular.
"We want to see the exact scenario of the bad loans in the banking sector because of the wrongdoings by the earlier regime. Afterwards, they will start taking actions to improve the scenario and you will see it."
Responding to another question over resignation of two deputy governors amid protest by a section of the BB officers, the governor said he would not allow any type of 'mob justice' in the central bank.
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