Liquidity surplus stands at Tk86,616 crore as of June 30, 2019
Bangladesh Bank (BB) Governor Fazle Kabir on Wednesday binned the notion of the liquidity crunch affecting the banks’ lending, saying the country's banking sector had sufficient liquidity.
"There is no liquidity crisis. Rather, we found excess liquidity to the tune of Tk86,616 crore at banks till June 2019 after maintaining CRR (cash reserve requirements) and SLR (statutory liquidity ratio) provisions," Fazle Kabir said replying to a question at the unveiling program of monetary policy statement for the current fiscal year.
Expressing his wonder, Kabir said he experienced reverse reactions from different quarters, including media, over the central bank’s regulatory measures involving financial entities, or individuals.
“We did not liquidate Farmers Bank. Rather, we tried to help the bank to survive by extending capital support from state-owned banks of Sonali, Agrani and others. People and media criticized us in a negative way for doing so,” Kabir told the program.
“Now we have initiated liquidation move of People's Leasing and Financial Services (PLFS) Limited and critics including media friends again came up with negative criticism against central bank. This reverse attitude of critics towards central bank has really surprised me," he said, adding the central bank was on the right track in discharging its duty.
The governor said the PLFS's liquidation would not affect the financial sector.
"PLFS and some other non-bank financial institutions (NBFIs) have been going through trouble due to liquidity shortfall. We are on the course of liquidating PLFS and asked others to reorganize boards and undertake fresh plans to accelerate their financial operation," he said.
Turning to liquidity issue again, the governor said the central bank took necessary measures from time to time to address liquidity shortfall of some weak private banks and the practice would continue in the coming days.
The governor said a mismatch had been detected in liquidity status of banks as some banks had sufficient liquidity while some others did not.
Deputy governors Md Moniruzzaman, Ahmed Jamal, chief economist Akhter Hossain, change management advisor Allah Malik Kazemy, Bangladesh Financial Intelligence Unit chief Abu Hena Mohd Razee Hasan, banking reform advisor SK Sur Chowdhury also spoke to reporters at the briefing.