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The Association of Bankers, Bangladesh (ABB), a platform of managing directors of banks in Bangladesh, yesterday said depositors’ money in banks were completely protected as lenders were now enjoying a hefty amount of excess liquidity.
“There is no reason to panic regarding the deposits kept in banks by the masses,” Selim RF Hussain, chairman of the ABB, told The Daily Star in an interview.
“Banks are quite strong when it comes to repaying the depositors given their strong liquidity base,” he said.
The amount of excess liquidity in the banking sector now stands at around Tk 169,000 crore, showed data from Bangladesh Bank.
The central bank always provides liquidity support to banks, which usually face cash shortages. And the BB is now also giving the same cash support such that depositors can withdraw money they require from lenders at any time, he said.
A vested quarter is now trying to mislead people about the country’s banking sector by spreading rumours on various social media platforms in order to erode depositors’ confidence on lenders, Hussain said.
“The group has ill-intentions. It is trying to weaken the country’s economy by spreading rumours to create a distrust of banks among the ordinary people,” he said.
The vested group is now spreading fake news capitalising on the ongoing stress on the foreign exchange market, said Hussain, also the managing director of Brac Bank.
Banks have already taken up several initiatives to restore stability in the foreign exchange market with the help of the central bank, he said.
A good number of banks are now opening letters of credit (LCs) cautiously, which he termed as a time-befitting move as the lenders are now facing a shortage of dollars.
The prices of many essential commodities in the global market have skyrocketed in recent times, which is why businesses are requiring more greenbacks to buy the products than before, said Hussain.
“We have to ensure a balance between the inflow and outflow of dollars,” he said.
There was no problem over importing any item during the pre-pandemic period but things are completely different now, he said.
Under such a situation, banks should open LCs considering the supply of the dollar, said Hussain.
On top of that, businesses availed short-term foreign loans amounting to around $15 billion to $18 billion just two to three years back, he said.
The loans have started to reach maturity, so there is pressure on the economy emancipating from the repayment of foreign funds, Hussain said.
In addition, many importers enjoyed deferral support to settle their LCs a year ago due to the business slowdown stemming from the pandemic. Now time has come to make the import payments, creating an additional pressure on the foreign exchange reserves, he said.
The reserves stood at $34.24 billion yesterday in contrast to around $45 billion a year ago.
“We had no hint both about the pandemic and Russia-Ukraine war. So, the unexpected events have hit the economy all of a sudden. Against the backdrop, we should work together to tackle the situation,” he said.
Banks are now spending their dollars based on the supply of the foreign currency and the current attitude of banks is completely appropriate, he said.
“We should revisit our financial programmes given the situations of the pre and post-pandemic times,” he said.
Things have started to get better as banks have already stopped importing non-essential goods, he said.
Moreover, both Bangladesh Foreign Exchange Dealers’ Association, an organisation of banks that implements foreign exchange-related policies, and the ABB is now working jointly to tackle the volatility, he said.
Hussain went on to hope that the economy would turn for the better within the next couple of months due to recent measures taken by both banks and the BB.
(TDS)
