Two private banks -- Islami Bank Bangladesh Limited and Global Islami Bank (NRB Global) -- borrowed more money from the Bangladesh Bank on Wednesday due to liquidity crisis they have been facing following recent reports of loan scam.
The central bank lent Tk 12.5 billion (1,250 crore) against two Sukuk bonds (Islamic bond or “Sharia-compliant” bond). The tenure of the facility is 14 days.
The Islamic banks in the country have been facing liquidity crisis as many customers are withdrawing money from the bank following recent reports of a huge loan scam.
To tackle the situation, on Monday Bangladesh Bank issued a circular to provide the liquidity facility to the Islami banks. The order was implemented on the day.
Using the facility, the Islami banks have started lending money from the central bank, depositing Sukuk.
On Tuesday, the first working day following the circular, the central bank lent Tk 40 billion (4,000 crore) to five Islami banks.
Bangladesh Bank could take charge of these banks by removing the board of directors and managing committee on an emergency basis. The faith of the depositors' will be restored then. If assistance is given in this way instead of taking any action, owners of other banks will also be encouraged to commit such irregularitiesAhsan H Mansur, executive director, Policy Research Institute
The five banks are -- Islami Bank Bangladesh Limited, Union Bank, Social Islami Bank, First Security Islami Bank and Global Islami Bank. The Islami Bank Bangladesh Limited got the largest amount of the money.
All the five banks are being run by one business conglomerate.
Speaking to Prothom Alo, Bangladesh Bank spokesperson Mesbaul Haque said, it was decided to give Tk 40 billion to the banks on the first (of issuing the circular). The Islami banks can take the money as they need against the Sukuk.
Officials of the Islamic banks said outside the statutory deposit the banks do not have much bonds now. They won’t be able to borrow much money as well. That’s why the bank officials said they are concerned about the future.
Islami Bank Bangladesh Limited is trying to recover the money they lent recently. But the money won’t be returned soon as those have been invested in different sectors. At the same time, it is not getting money from other Islamic banks as those also are in crisis.
Regarding the overall situation, Policy Research Institute’s (PRI) executive director Ahsan H Mansur told Prothom Alo, “The owner of six Islamic banks is one person. Many irregularities like that of Islami Bank have taken place in other banks as well. Without taking any punitive action, the situation in the banking sector cannot be improved by financial assistance from the Bangladesh Bank.”
He further said, “Bangladesh Bank could take charge of these banks by removing the board of directors and managing committee on an emergency basis. The faith of the depositors' will be restored then. If assistance is given in this way instead of taking any action, owners of other banks will also be encouraged to commit such irregularities.”
Out of 61 banks in the country now, 10 are Islamic banks. Islami Bank Bangladesh Limited is the largest among them with around Tk 150,000 crore deposit.
Other Islamic banks are First Security Islamic Bank, Union Bank, Social Islami Bank, Global Islami Bank, Al-Arafah Bank, Exim Bank, Shahjalal Bank, Standard Bank and ICB Islamic Bank.
Besides this, Islamic banking service is provided in different branches of nine traditional banks while Islamic banking service is available at different sections of 13 banks.