Md Mehedi Hasan

The volume of cash outside the banking sector of Bangladesh has been increasing since the start of the year due to persistent inflation, the loss of consumer confidence in the sector due to the presence of ailing lenders, and the prevailing situation following the recent political changeover.

Sixteen non-bank financial institutions (NBFIs) faced a combined provision shortfall of Tk 1,954 crore till June this year, reflecting that their financial health had worsened.

As crisis-hit lenders have started getting liquidity support from the inter-bank money market, they are now repaying depositors for specific purposes, such as medical emergencies, and in the case of salary disbursement or remittance encashment.

EkPay, an e-payment system of the Aspire to Innovate (a2i) programme of the government, has been offering all types of payment services without obtaining a licence from the Bangladesh Bank (BB), which is in clear violation of the Payment and Settlement System Act-2024.

Non-bank financial institutions (NBFIs) in the past fiscal year saw their defaulted loans reach a record 33.15 percent of all disbursed loans, according to the central bank, indicating a fragile situation in the sector thanks to widespread loan irregularities and scams.

About $809 million has piled up in a Bangladesh Bank escrow account to repay loans and interest for the Russia-funded Rooppur Nuclear Power Plant.

S Alam Group and its linked companies account for more than 86 percent of the disbursed loans of Global Islami Bank (GIB), one of the six Shariah-based lenders that were controlled by the Chattogram-based business giant.

S Alam Group’s takeover of the Islami Bank to drain the healthiest bank of the country had left investors and customers in shock. It did not stop there.

Five crisis-hit banks have obtained a Bangladesh Bank (BB) guarantee to avail liquidity support from the inter-bank money market, according to central bank officials.

The Financial Intelligence Unit (FIU) of Singapore has requested details about the Chattogram-based conglomerate S Alam Group and its owners, including information on their domestic and foreign assets, from Bangladesh’s Financial Intelligence Unit (BFIU).

The overseas assets of S Alam Group, including those in Singapore, came under scrutiny following recent media reports.

Former land minister Saifuzzaman Chowdhury Javed compelled UCB board members to resign and former prime minister Sheikh Hasina was aware of this, according to the lender’s new Chairman Sharif Zahir.

National Bank, Islami Bank Bangladesh and Social Islami Bank have applied to the Bangladesh Bank (BB) for its guarantee to avail a total of Tk 6,800 crore in liquidity support through the inter-bank money market for a period of three months.

The Asian Development Bank (ADB) and the World Bank are expected to provide funds to Bangladesh for banking sector reforms, including strengthening and modernising the central bank.

In the first week of July, the Bangladesh Bank and Islami Bank Bangladesh completed a US dollar-taka trade, a typical mutual currency deal, which was supposed to replenish the central bank’s dwindling forex reserves and provide the cash-strapped Shariah-based lender with some liquidity support.

In the first week of July, the Bangladesh Bank and Islami Bank Bangladesh completed a US dollar-taka trade, a typical mutual currency deal, which was supposed to replenish the central bank’s dwindling forex reserves and provide the cash-strapped Shariah-based lender with some liquidity support.<

Default loans in the banking system surpassed Tk 200,000 crore for the first time, underlining the fragile condition of the sector that fell prey to rampant scams and irregularities under the tenure of the Awami League government over the past 16 years.

Default loans in the banking sector hit an all-time high of Tk 211,000 crore at the end of June of this year, as per the latest Bangladesh Bank data. 

Three state-run banks far exceeded their limits to salvage a coal-fired power plant project of an Orion Group subsidiary, which was stalled for six years, with Tk 10,579 crore in loans thanks to policy relaxation by the Bangladesh Bank under the now-ousted Sheikh Hasina government.

The Bangladesh Bank (BB) has instructed the recently restructured banks to identify and assess their loan exposure to politically exposed and important persons as they might fail to repay the loans.