Janata seeks Tk10,000cr liquidity support from Bangladesh Bank

State-owned Janata Bank has requested Tk10,000 crore in liquidity support from the Bangladesh Bank to stabilise its cash flow and normalise liquidity situation.

Confirming the matter, Md Mazibur Rahman, managing director of Janata Bank, told The Business Standard that the bank has recently sent a letter to the central bank, requesting a Tk10,000 crore loan for a five-year term at 4% interest.

"If we receive this amount, our liquidity situation will improve," he said.

When asked why the bank needed money at this moment, he said, "Everyone is aware of the bank's current situation. I have recently taken over the role as MD, and many customers are coming to withdraw money. To avoid future problems in case of increased withdrawal pressure, we have requested this loan from the central bank."  

A policy-making official from the central bank confirmed receiving the letter and said they were reviewing the situation and no final decision had been made yet.  

Padma Bank, which is on the list of weak banks, has also requested Tk1,300 crore liquidity support from the central bank to return customer deposits. 

In November, Bangladesh Bank provided Tk22,500 crore in liquidity support to six troubled banks – National, Exim, Social Islami, First Security Islami, Global Islami, and Union Bank.  

However, the central bank said that while money is being printed, efforts are also being made to withdraw this money from the market to prevent inflation from rising.  

Janata Bank is currently struggling with various issues due to irregular loan distribution.  

In September, the bank's deposits totaled Tk1.12 lakh crore, and its loans amounted to Tk98,537 crore, with defaulted loans accounting for 61% (Tk60,489 crore) of the total loans.  

At the end of September, the bank posted a net loss of Tk1,504 crore, causing Janata Bank's capital shortfall to increase to Tk33,921 crore.  

A senior official from Janata Bank revealed that 55% of the bank's loans are concentrated in the top 10 industrial groups.  

"Due to these influential customers failing to repay their loans on time, the bank's liquidity crisis is worsening. In the current situation, the bank has to borrow Tk18,000-20,000 crore daily to carry out its regular operations," added the official.  

In a recent letter to the government, Fazlur Rahman, chairman of Janata Bank, said, "Such a fragile situation has never been faced in the history of Janata Bank. The bank is now in a deep crisis."  

The issue was also raised in a recent meeting with Bangladesh Bank Governor Ahsan H Mansur.