The Bangladesh Bank (BB) has issued a warning to five Islamic banks facing liquidity challenges, directing them to rectify negative balances in their current accounts within a 20-working-day timeframe. The spokesperson for Bangladesh Bank, Md Mezbaul Haque, confirmed this development during a press conference on Sunday. The warning letters were dispatched to Islamic Bank Bangladesh PLC, Social Islami Bank Limited, Union Bank PLC, First Security Islami Bank PLC, and Global Islami Bank PLC.
Haque clarified that the warning does not signify a decision to cancel money payment services, emphasizing that the ultimate decision lies with the Payment Systems Department despite the initiation of communication by the central bank’s Motijheel office. Liquidity issues in these banks have arisen from structural problems in Islamic banking, prompting the central bank’s proactive response.
Addressing the immediate focus of Bangladesh Bank, Haque stated, “The main goal of the central bank at this moment is to control inflation. Once we alleviate external pressure, the Bangladesh Bank will shift its focus to the governance of banks facing crises.”
The Payment Systems Department holds the authority to decide on the continuation of transactions with other banks if the deficit in the current accounts is not resolved within the specified 20 working days. Haque disclosed that ICB Islamic Bank Limited had previously received Tk700 crore in support. While the Bangladesh Bank routinely provides assistance to banks with negative current account balances, the warning letters dated 28 November explicitly instruct the banks to promptly adjust their negative balances.
The letter from the Motijheel office of Bangladesh Bank highlighted the prolonged negative current account balances, stating, “Although the matter has been brought to your attention repeatedly, you have not taken any significant steps so far.” It advised the banks to address the negative balance within 20 working days, warning that failure to do so would result in being barred from any clearing platform as per the contract signed with the Payment Systems Department.
