Islami Bank under reserve pressure amid Tk4,240cr withdrawals after chairman appointment
According to a senior official, the bank has also sought liquidity support of Tk10,000 crore from the central bank to address the CRR shortfall.
Highlights:
- Islami Bank Bangladesh Limited's CRR has turned negative after a surge in withdrawals following Khurshid Alam's appointment as chairman.
- Around Tk4,240 crore was withdrawn in the past seven days, according to a senior bank official.
- The required CRR was about Tk7,000 crore but dropped to around Tk2,600 crore, though the current account with Bangladesh Bank remains positive.
- The bank has sought Tk10,000 crore in liquidity support from the central bank.
Islami Bank Bangladesh Limited has said its cash reserve ratio (CRR) has moved from a positive position to negative, following a surge in customer withdrawals after the appointment of Khurshid Alam as chairman.
According to a senior bank official, customers across the country began withdrawing money after his appointment. In the past seven days, customers have withdrawn around Tk4,240 crore from the bank.
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The official said the heavy withdrawal pressure has pushed the bank's CRR into negative territory today (9 June).
Cash Reserve Ratio refers to the portion of total deposits that banks must keep in cash with the central bank. In Bangladesh, banks are generally required to maintain an average CRR of 4%.
The official said that before Khurshid Alam's appointment, the bank's CRR was higher than the regulatory requirement. However, due to recent panic-driven withdrawals, it has now fallen significantly.
"We had a requirement of around Tk7,000 crore, and we were able to maintain more than that. Due to the current situation, it has dropped to Tk2,600 crore. However, our current account with Bangladesh Bank remains positive," he said.
According to the official, the bank has also sought liquidity support of Tk10,000 crore from the central bank to address the CRR shortfall.
Earlier, on 24 May, former chairman Zobaidur Rahman resigned from his position. On the same day, the central bank appointed Khurshid Alam, a former deputy governor of Bangladesh Bank, as the new chairman. He had earlier resigned from the deputy governor post following the fall of the Sheikh Hasina government on 5 August amid protests.
