Bussiness & Economics
Features

Editorial

General :

Open Market Economy
Micro & Macro Economics
Global Economy Analysis

Bangladesh Context :

Tax, Customs & Finance Acts
Commercial & Industrial Laws
Banking & Insurance Co. Acts
General Laws and Ordinances

National Economy :

National Economy Analysis
National Budget Analysis
National GDP Analysis
Foreign Aid, Loans and Grants
ADP analisis of Bangladesh
Business Information

Current Features
 
Journals & Articles :
 
Bussiness Information :
 
Directory of  Writers :
 
 Contact Information :

Registered office:

House -# 16 (1st floor)
Suite 2A, Road # 36, Gulshan-2, Dhaka-1212.
Bangladesh.

Tel    :+88-02-9858849, +88-02-9891538
Mob  : 01711336825
Email: info@bdjobs.com.bd
Web : www.bdjobs.com.bd

 
   
     
   
   
     
   
     
   
     
   
Bangla Current Features English
Nadia Hassan
Journalist
Tel : 8825478
Mobile : 01718 021458
E-mail : info@adnjobsbd.com
All Journals Journals & Articles Biography

Liquidity dearth grips state banks

State banks have now been suffering from a severe liquidity crisis due to excessive credit expansion and absence of a competitive interest rate on deposits. Bangladesh Bank (BB) last week alerted the government to the problem and called for taking necessary steps. The BB in a letter to the government said, despite a fall in deposits, the state banks continued credit expansion, which resulted in the cash crunch.

 
 

The central bank also attached a report to the letter written to the Bank and Financial Institution Division of the finance ministry, projecting the overall situation of the state banks, a ministry official said.A BB official said the central bank board discussed the overall situation and decided to convey the alert to the government. In the letter, the BB said average deposits in the banking sector increased by 15 percent and credit grew by 9 percent in the first six months of the current fiscal year.

But the situation was opposite in the state banks as their deposits rose by 9 percent against the growth in credit at 15 percent. The central bank letter said its board noticed with concern that in the past, the state banks were insolvent but never faced a liquidity crisis; but now they are under liquidity pressure. The BB also asked the government to be aware of fund mismanagement in the banks.

According to a BB report on September 11, every state bank lost deposits compared to those on June 11. During this three-month period, Sonali Bank's deposits dropped by Tk 573 crore, Janata Bank's Tk 990 crore, Agrani Bank's Tk 706 crore and Rupali Bank's Tk 6 crore. The central bank said their deposits fell as their interest rate is lower than that of the private banks.
In the past the state banks used to lend to the “call money” market, but now they are borrowing from the market, the BB added.

The main reason behind this is excessive credit expansion, the letter pointed out. The BB report said the four banks prepared their liquidity profile and are managing their asset-liability depending on assumption-based information. As a result, their liquidity is facing excessive volatility, it added. The central bank has also warned the four banks in writing in this regard.

The BB report also said the performances of Sonali and Janata banks as the primary dealers (PD) of government securities are not satisfactory. A lack of depth in the secondary bond market and the inefficiency of the officials of the banks were responsible for their failures to perform well as PDs.

The BB report said though these banks did not have any liquidity crisis, they are now gripped with a cash crunch due to the inefficiency. The central bank letter said a recent stress test on the state banks showed that moderate negative change in the credit account of the major borrowers may create a big problem in these banks' capital. 

Important Issues
Bussiness Offers
Trade Fair Info.
Visa Assessment
Emergency Factors
Specialized Doctors
 
  Digital bangladesh Features
 Ads Search

 Job Search

Information Zone :
Important Links
 
 
 
 
   
     
   
     
   
     
   
     
   
     
   
     
   
Back to Home