Drawn-out disbursement process and excessive cost of fund in the central bank-guaranteed liquidity feeding to the crisis-ridden commercial banks are making it more of a hindrance than help, bankers said.
Because of the delay even in getting the costly cash assistance from the well-off banks under the guarantee scheme, the troubled banks find it hard to handle the customers rushing to withdraw their money out of heightened panic, which ultimately further widens their woes, according to the bankers.
Under such a situation, they noted, the pressure of depositors to withdraw cash keeps growing and the banks amid persisting liquidity crunch are battling hard to calm down the anxious depositors by disbursing an amount too little to meet their requirements.
High-ups of six crisis-hit commercial lenders, mostly unconventional, shared such concerns in a meeting with the Bangladesh Bank governor, Dr Ahsan H Mansur, Monday at the headquarters of the central bank.
The six banks at the receiving end are Social Islami Bank, First Security Islami Bank, Bangladesh Commerce Bank, Union Bank, ICB Islamic Bank and Padma Bank.
Seeking anonymity, a BB official who attended the meeting told the FF that the governor wanted to know the current situation of the banks following the restructuring of their boards in the interim period after the August political changeover.
The top executives and board members of the banks informed the high-ups of the banking regulator about the delay in getting the fund requirements under the BB liquidity-support guarantee programme.
"They demanded immediate disbursement of more cash supports to resolve the crisis," the official said.
In response, the governor asked them to concentrate more on cash recovery and deposit-mobilising drives to weather the liquidity stress, according to him.
The central banker also informed that the banks also shared their worry over the high costs of the guaranteed credits.
Chairman of First Security Islami Bank Mohammad Abdul Mannan said they demanded Tk 79.0 billion in cash supports to revive the unconventional bank from the prevailing crisis for no fault of their own.
"But we have received only Tk 1.25 billion so far under the guarantee scheme, which is too little even to maintain our day-to-day banking affairs," he said.
The delay in getting the credits becomes a concerning matter for the cash-strapped banks. The central bank should take measures to ensure faster disbursement of the funds, he said.
According to BB documents, four affluent banks had approved Tk 7.50 billion to the First Security Islami Bank until October 16, 2024.
Sharing the bank's bail-in performance after its board was recast on September 1st, 2024, Mr Mannan said the bank managed to collect deposit amounting to more than Tk 10 billion in less than two months.
On the other hand, the experienced banker said they recovered cash amounting to Tk 10.35 billion during this period. Despite the performance, the bank faces difficulties in assuaging depositors' cash-related concerns.
"I think the BB should take steps to ensure faster disbursement of the cash supports so that we can act according to our revitalisation plan," he added.
Seeking anonymity, a top executive of a struggling bank who attended the parleys, said alongside the delayed cash-release pain, the bankers also shared the concern of unprecedented costs involved in the guaranteed credits, which creates additional burden.
He said the affluent banks are charging interest rate in-between 12 per cent and 14 per cent, which is abnormally higher in the current context of interest regime.
"If we look at the interest rate on the interbank call-money market where the highest rate is 11 per cent on Monday, the rate we are forced to pay is not rational," he said.
The executive said they requested the central bank high-ups to look into the matter with due importance to make the fund-feeding initiative a success.
"We proposed to the BB to fix the rate of interest under the guarantee scheme by considering the policy rate (now it is 10 per cent) with a little margin."
The executive also informed that the banks also requested the regulator to relax LC (letter of credit) margin rules for the crisis-hit banks like other scheduled lenders. "It will help increase cash flow of the cash-strapped banks."
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