Home ›› 10 Aug 2021 ›› Front
State-owned Janata, Sonali, Agrani, and Rupali banks are in trouble with their Tk 3,630 crore deposit with Investment Corporation of Bangladesh (ICB) as the latter is not paying interests regularly and unable returning the principal.
The banks have repeatedly asked the ICB to return their money kept as FDR or fixed deposit receipts. Sonali Bank invested Tk 1,650 crore, Agrani Bank Tk 1,050 crore, Janata Bank Tk 480 crore and Rupali Bank Tk 450 crore as term deposits in the ICB.
These banks are not getting interests and principal even after the expiry of most of the FDRs. The ICB is not giving back the money despite legal obligations.
Shams-ul Islam, managing director and CEO of Agrani Bank, said ICB was paying some interest.
“They want to renew the principal with interest. The state-run organisation is now in a better shape than before,” he told The Business Post.
Islam said that withdrawing their FDR from ICB in this situation would affect the capital market. “We want the capital market to be upbeat, as it is benefiting from ICB,” he said.
Banks and financial institutions consider call money, term deposits, interbank repo, reverse repo, special repo, and Assured Liquidity Support (ALS) for cash liquidity protection (CRR) as a liquidity component of the money market.
Maintaining CRR becomes difficult if banks or financial institutions do not return the deposit even after the expiry of the term. In addition, if mutual trust is lost, the money market suffers.
The banks now want the intervention of the central bank to bring back the money deposited with various institutions to maintain the discipline of the money market.
A senior official of a state-owned bank said he had verbally asked the Bangladesh Bank’s concerned
department to intervene to recover the money.
However, ICB Managing Director Abul Hossain told The Business Post, “We have been paying interest against the money that the state-owned banks have deposited with us as FDR. We have paid interest on the deposits of all the institutions since I joined.”
“We can give back the state-owned banks their money if they want. But it won’t be possible to pay all of them at once,” he added.
But a senior official of the central bank told The Business Post that ICB was in no position to return the deposit.
The official said there are rules to renew the interest, and ICB is trying to pay interest.
“It is the organisation’s responsibility to return the money when the term expires. We’ll give reminders to those who cannot return the money,” Sirajul Islam, executive director and spokesperson of Bangladesh Bank, told The Business Post.
The ICB has also invested in shares of 26 ‘Z’ category companies. Sector stakeholders have expressed concern over investment. A recent report by a consulting firm appointed by the BSEC submitted a report with a restructuring plan for the state-run ICB, reportedly plagued by various irregularities.
“The ICB is heavily dependent on the state-run commercial and private sector banks for its funding, though it should approach the Bangladesh Bank for such loan at a subsidised rate so that it can pay off its high-cost borrowings and increase cash flows and profitability within a short term,” the report said.
