Alauddin, a middle-aged migrant worker who recently returned from Saudi Arabia, faced a shocking reality last Thursday when he attempted to withdraw Tk 50,000 from the Bashabo branch of First Security Islami Bank (FSIB). Desperate to secure the funds for his father's medical treatment at Lakshmipur District Sadar Hospital, Alauddin was offered just Tk 5,000 by the bank.
After explaining the urgency of his situation, he managed to persuade bank officials to increase the disbursement, but they only agreed to provide Tk 10,000, citing a severe liquidity crisis.
"I told them it's for my father's treatment, but they said the bank is struggling with cash flow and couldn't offer more," Alauddin shared, visibly frustrated. "How am I supposed to cover these expenses?"
The issue is not isolated. Similar incidents have been reported across the country. UNB learned that both FSIB and National Bank's branches in Tangail saw gatherings of customers last Wednesday and Thursday, with many walking away disappointed after being offered only Tk 5,000 to Tk 10,000 per transaction, regardless of their withdrawal amounts.
Senior FSIB officials, speaking to UNB, acknowledged the crisis, explaining that banks are facing unprecedented liquidity shortages due to a rush of withdrawals as customers scramble to meet their expenses. Customers were asked to withdraw smaller amounts gradually, said one official.
Muhammad Abdul Mannan, chairman of FSIB, confirmed the challenges but assured that steps were being taken. "We have signed an agreement with Bangladesh Bank to secure Tk 300 crore this week to meet emergency demands. Additionally, FSIB has gathered Tk 450 crore from its investments to address the shortage," he said.
Mannan pointed out that the central bank had guaranteed inter-bank loans to ensure liquidity in the short term. "It is a regular system in the banking sector, which was hampered due to various bad practices during the last government in the country," said Mannan, who is also vice president of Bangladesh Association of Banks (BAB).
Abdul Awal Mintoo, chairman of National Bank Limited (NBL), echoed similar concerns, blaming Bangladesh Bank's lack of regulation for the financial distress. National Bank has always maintained a solid reputation, but in recent years, it faced serious issues due to poor oversight by the central bank, he said, adding now, it's their responsibility to step in and fix the liquidity shortage.
Depositors are now feeling the brunt of the massive loans taken by companies like S Alam and Sikder Group, which have crippled banks after these groups failed to return the borrowed funds. With the regime change in Bangladesh, many of these individuals have gone into hiding or fled the country, leaving banks in dire financial straits.
The Bangladesh Bank has already restructured the boards of 11 banks in response to the crisis and imposed restrictions on the sale of assets linked to S Alam and Sikder Group. These assets may be sold to recover the defaulted loans, Bangladesh Bank Governor Dr Ahsan H Mansur said, adding that the government will ensure that depositors' money is safe.
Across Bangladesh's 61 banks, covering over 11,000 branches, many are grappling with a significant cash crunch. According to central bank sources, the flow of money in the market has been reduced somewhat due to the contractionary monetary policy.
Unrest in recent months, sparked by student protests and political upheaval, has further exacerbated the issue. At that time, banking activities were severely disrupted, leading to widespread delays in cash transfers and a backlog of transactions.
