Three strongest banks of Bangladesh have provided Tk 16.40 billion in loans to the country’s six weak banks to resolve their liquidity crisis under a ‘strong-weak’ agreement in response to their petitions.

The Sonali Bank, Mutual Trust Bank, and Dutch Bangla Bank provided the support to First Security Islami Bank, Social Islami, Union Bank, Global Islami Bank, National Bank and Exim Bank.

Among the recipients, First Security Islami Bank received Tk 3.7 billion from Sonali bank, Social Islami Bank received Tk 3 billion from Sonali Bank (Tk 2 billion) and Dutch Bangla Bank (Tk 1 billion), Union Bank received Tk 1.5 billion from Sonali Bank, Global Islami Bank received Tk 950 million from Mutual Trust Bank (Tk 200 million) and Sonali Bank (Tk 750 million), National Bank received Tk 3.20 billion. From Sonali Bank (Tk 2.2 billion) and Dutch Bangla Bank (Tk 1 billion) and Exim Bank received Tk 4 billion that entirety of which was provided by Sonali Bank.

The funds were transferred on Thursday after they were approved by Bangladesh Bank. Islami Bank has also sought similar liquidity support.

Bangladesh Bank official spokesperson and Director Shahriar Siddiqui told bdnews2014.com, “Liquidity assistance has been given to these weak banks in response to their petitions. This assistance will be given to more banks in the future after their applications are scrutinized."

Since the government changeover, the issue of irregularities in the banking sector has come to the fore. In particular, the Chattogram-based S Alam Group has been accused of embezzling loans from the Islamic banks under their control.

Bangladesh Bank has already appointed administrators at all banks that are receiving liquidity support. Aside from Exim Bank, the remaining five banks were under the control of S Alam Group.

A Bangladesh Bank official said, "There is a liquidity crisis in several banks. Ten strong banks have already agreed to give cash to these weak banks. We hope that customers will not have to leave banks empty-handed.”

There has been a significant shift in the leadership of the financial sector since the student-led mass movement toppled the Awami League government on Aug 5. First, a campaign was launched to ‘free’ Islami Bank. Similar campaigns then spread to other banks too.

In the face of protests, Bangladesh Bank governor Abdur Rouf Tarukder, the deputy governor, the head of the Bangladesh Financial Intelligence Unit and the policy advisor resigned.