Bangladesh Bank building in Dhaka. — File photo.
The Bangladesh Bank on Sunday confirmed that it had issued warning to five Shariah-based banks, citing persistent deficits in their current account balances maintained with the central bank.
BB spokesperson and executive director Md Mezbaul Haque at a press conference clarified the BB position on this matter.
The BB clarification came after it published an emergency notice on its web site on December 15 over media reports on the matter, saying that its payment system department did not made any decision on removing the banks from clearing platforms.
The five banks — Islami Bank Bangladesh, Social Islami Bank, First Security Islami Bank, Union Bank and Global Islami Bank — are all controlled by S Alam Group.
In a letter dated November 28, the BB’s Motijheel office cautioned these banks, informing them that they could be removed from the clearing platform if they failed to rectify the deficits in their current account balances within 20 days.
Mezbaul said that the warning was issued, but no final decision in this regard was yet to be made.
Although the letter was sent by the BB’s Motijheel office, he clarified that the determination to remove these banks from the clearing platform would be made by the payment system department of the BB.
He also said that the shariah-based banks were suffering from structural deficits and the BB soon would work on this.
The letter sent by the BB’s Motijheel office said, ‘After assessing your banks’ outstanding current account balance, it was observed that the current account outstanding remains negative for a long time, which is not rational.’
It said that ‘despite notifying the issue over and over again, you didn’t take any mentionable steps’.
A bank’s current account with the central bank is used for clearing and settlements of payments between commercial banks. Besides, banks are required to maintain a certain amount of funds as cash reserve ratio and statutory liquidity ratio with the central bank, which are deposited in the current account.
The balance in the current account cannot be negative.
As these five banks have barely maintained the CRR and SLR requirements, their current account balance fell severely short, according to the officials concerned.
Though these banks do not have enough liquidity, they continued disbursing loans, sending their current account balance negative, the officials said.
New Age
