Stop transferring funds from one bank to another: BB spokesperson

The central bank has urged customers to stop the practice of withdrawing funds from one bank and depositing them into another.

"We are responsible for this situation because many misleading messages have been circulated," said the spokesperson for Bangladesh Bank.

Husne Ara Shikha, Bangladesh Bank's spokesperson and Executive Director, explained that a liquidity crisis has arisen in certain banks due to a rush of depositors attempting to withdraw their funds amid a crisis of confidence.

At a press conference on Wednesday at the Bangladesh Bank Conference Center, she stated, "Customers are rushing to withdraw funds all at once, and as a result, many are unable to access their money. The number of people trying to withdraw funds has increased significantly. Bangladesh Bank is working to restore confidence, and maintaining depositor trust is a shared responsibility between the banks and the central bank."

Following the government’s fall after student protests, customers have faced difficulties withdrawing funds from various banks, particularly those controlled by the S Alam Group.

Despite efforts by the new Governor, Ahsan H. Mansur, over the past three months, the interim government has yet to resolve the crisis.

Even with liquidity support extended to struggling banks, many are still unable to meet customer demands.

Bankers report that customers are withdrawing deposits rather than making new ones, further exacerbating the situation.

Bangladesh Bank's spokesperson continues to reassure the public, stating, "There is no reason for panic regarding deposits held in banks." She explained that customers are primarily facing issues with cash withdrawals from Shariah-compliant Islamic banks.

"I urge customers not to panic about their funds. If a bank is in trouble, it is Bangladesh Bank’s responsibility to ensure that customer funds are returned on time."

Cash Crisis Eases for Five Banks

Husne Ara Shikha emphasized that misleading messages and a lack of trust have caused customers to withdraw funds from Islamic banks, triggering a liquidity crisis. "We are responsible for this because of the misleading messages that have been spread," she acknowledged.

She noted that liquidity support has been provided to Islamic banks, but the crisis continues because of simultaneous, large-scale withdrawals. To stabilize these banks, the rush of withdrawals needs to stop.

The spokesperson also pointed out that while liquidity support from Bangladesh Bank is ongoing, the situation will not improve unless the volume of withdrawals is reduced.

She suggested that the central bank may not be able to provide the level of liquidity support some banks are expecting.

Discussions are ongoing between bank chairpersons and the governor to explore more effective solutions.