The Bangladesh Bank is facilitating loans for struggling banks by allowing stronger banks to lend to them, using the central bank’s guarantee. This arrangement requires approval from the board of the weaker banks, followed by a contract with the central bank, enabling these banks to access special loans for a designated period. Initially, five private banks have been informed about this arrangement. Following political upheaval on August 5, which led to the restructuring of 11 bank boards, concerns over significant loan defaults and money laundering are being investigated. The central bank’s strategy aims to address liquidity issues without printing new money, which could exacerbate inflation. Recent applications for special loans have also come from Islamic Bank Bangladesh, Padma Bank, and Exim Bank, with Exim Bank recently receiving Tk 1,000 crore at 10.5% interest. As a result of the political crisis, there has been a notable decrease in the currency in circulation, dropping to Tk 314,583 crore from Tk 322,271 crore on August 18. This reflects a return of Tk 7,688 crore to the central bank, as depositors increasingly choose to move their funds to more stable banks.
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