Troubled National Bank seeks Tk1,000cr more from Cenbank

National Bank Limited, a troubled private commercial bank, has approached the Bangladesh Bank with a request for an additional Tk1,000 crore in liquidity support, despite having already received Tk4,000 crore from the central bank recently.

A senior central bank official, on condition of anonymity, told TBS, "They sought the support at a 10% interest rate. However, a final decision on whether the support will be granted is still pending."

Abdul Awal Mintoo, chairman of National Bank Limited, confirmed the request, saying, "The Bangladesh Bank initially indicated it would provide Tk5,000-6,000 crore, but they granted us Tk4,000 crore. Therefore, we have again requested an additional Tk1,000 crore to repay customer funds."

The central bank has asked National Bank to clarify how the Tk4,000 crore was utilised and we have prepared a presentation to explain the spending of the funds. A meeting with the Bangladesh Bank is scheduled for 12 January in this regard, he added.

Mintoo, a former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), expressed hope for the bank's recovery.

He said, "The previous board was involved in corruption at various levels, not just in loan disbursement irregularities but also in loan and interest waivers without adhering to rules. We need the central bank's assistance to overcome this."

Highlighting the bank's gradual progress, Mintoo mentioned that in December 2023, the bank was receiving an average of Tk20-30 crore in daily deposits. By December 2024, this figure had risen to Tk40-50 crore per day, and in January, it increased to nearly Tk60 crore.

Since Ahsan H Mansur took over as governor in August last year, the central bank provided Tk22,500 crore in liquidity support to six ailing banks in November through money printing. The affected banks include First Security Islami Bank, Social Islami Bank, Global Islami Bank, Union Bank, Exim Bank, and National Bank.

Upon taking charge, the governor said that no bank would receive support through money printing. However, he later revised his stance, explaining, "The Bangladesh Bank is raising funds through bills and using that money to support struggling banks, so it cannot be entirely considered money printing."

Several Bangladesh Bank officials, however, told TBS that the liquidity support provided to banks would have the same effect on the economy as printing money, as the funds provided far exceeded those raised through Bangladesh Bank bills.

In addition to the aforementioned banks, Padma Bank and Janata Bank requested liquidity support of Tk1,300 crore and Tk10,000 crore, respectively, but their requests have not been approved by the central bank yet.

A senior central bank official told TBS, "Providing liquidity support in this manner will only increase liabilities. While it may address some immediate issues, it could worsen long-term challenges."

In 2009, the Sikder Group had full control of the National Bank's board of directors, with long-time chairman Zainul Haque Sikder at the helm until his passing in 2021.

Syed Ferhat Anwar took over the chairmanship in December 2023, following a dispute among Sikder family members. During his tenure, discussions about merging NBL with United Commercial Bank were initiated. However, these talks stalled after the Awami League government was ousted by a student-led uprising in July-August. Meanwhile, NBL, entangled in loan fraud and irregularities, suffered a severe liquidity crisis.

Following the downfall of the Awami League, the Bangladesh Bank dissolved NBL's board, freeing it from Chattogram-based conglomerate S Alam's grip.