An affluent group of 17 scheduled banks receives instructions from the central bank for urgently extending liquidity support to cash-hungry banks for ensuring stability in the country's banking system.
Also, a set of other dos was spelt out at a meeting of the Bangladesh Bank with the top brass of the banks in order for overall economic stability.
The directions came at the meeting with managing directors (MDs) and chief executive officers (CEOs) of the banks at the central bank headquarters in Dhaka on Monday with Bangladesh Bank Governor Dr Ahsan H. Mansur in the chair.
At the meeting, overall liquidity issue was discussed and the governor advised the banks to provide more liquidity support to the crisis-hit banks, a senior central banker told the FE writer after the meeting was over.
The fresh regulatory firman came against the backdrop of a clarion call from the high-ups of some troubled banks for the central bank to arrange immediate disbursement of more cash assistance to resolve the ongoing crisis.
Earlier on November 05, six banks - Social Islami Bank, First Security Islami Bank, Bangladesh Commerce Bank, Union Bank, ICB Islamic Bank and Padma Bank - sought immediate cash feeding to meet their liquidity exigencies.
Seven crisis-hit banks had received Tk 55.85 billion as liquidity from nine well-off banks until November 05, according to central-bank statistics.
Some of the troubled banks have already obtained a central-bank guarantee to avail liquidity support from the interbank money market.
Earlier, the banking regulator had imposed nine conditions, like liquidity support will be maximum for one year on three-month basis, interest rate will be fixed at 11.50 per cent, equivalent to the existing level of special liquidity facility (SLF) rate, in the agreements with the cash-hungry banks.
In the event of failure to repay by the crisis-hit banks, the liquidity- providing banks can create 90-day tenure of forced loans in the name of the borrowing banks.
"An additional 2.0-percent interest or profit will be imposed on the SLF rate if the loans are not repaid on time," the credit deal reads.
If the BB fails to recover funds from the borrowers' current accounts, it will recover cash by selling off the banks' permanent assets, bonds and other securities.
At the meeting, various issues, including situation on the foreign-exchange (forex) market, overdue payments for letters of credit (LCs), mandatory banking-diploma examination, interest rates on credit-card loans and loan-write-off policy were discussed.
"We've been advised to provide more liquidity support to the troubled banks for avoiding any unwanted situation," Syed Mahbubur Rahman, MD and CEO of Mutual Trust Bank, told the FE in reply to a query.
He said the central bank governor also asked the bankers to keep the forex market stable.
Meeting sources, however, said all the scheduled banks had been asked to handle the forex market carefully to avoid further volatility on the market.
Besides, the banks are also asked to avoid cross-currency mechanism for making higher profits.
They said the bankers were also asked to clear overdue payments for LCs immediately for improving the country's image on the global market. The country's top bankers urged the central bank governor to review the interest rate on credit-card loans in view of the overall interest-rate situation in Bangladesh.
The interest on credit-card loans has already been fixed at 20 per cent, according to another central bank official.
The official further said the governor also instructed the banks not to offer dividend if they have capital shortfalls.
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