The Bangladesh Bank is introducing special liquidity support for banks weakened by irregularities and corruption, following a change in their boards. These banks will receive liquidity assistance against guarantees from the central bank, with stronger banks providing the liquidity. Previously, the central bank printed money to sustain banks, but it has now moved away from this approach, focusing on liquidity support through finalized policies. The central bank plans to provide assistance this week, with support based on specific indicators. On August 5, after the government’s fall, the central bank’s new governor began restructuring, leading to the dissolution of boards at 11 banks and one financial institution, previously controlled by a group accused of massive fund withdrawals. The central bank will now act as a guarantor, offering liquidity for three, six, or twelve months to these banks, prioritizing small depositors and reinforcing loan recovery efforts. The assistance aims to address liquidity crises and prevent bank failures, with an emphasis on asset-based evaluations and restructuring.
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