Fourteen listed banks suffered significant liquidity shortage in the January-March quarter of the year of 2019 even though the entities managed to attain profits in the period.
According to the first quarterly reports of listed banks published through the stock exchanges, the net operating cash flow per share (NOCFPS) of Rupali Bank was the worst — negative Tk 79.51.
Negative cash flow means a bank has borrowed money from other financial institutions or from Bangladesh Bank to meet day-to-day cash requirements.
High amount of defaulted loans that has resulted in high provisioning requirements and poor deposit growth in the country’s banking sector are the major reasons for the current liquidity crisis in the banking sector, bank officials said.
They also said that huge sales of national savings certificates due to their higher returns compared with the returns from the bank deposits had also worsened the liquidity crisis in banks.
Association of Bankers, Bangladesh chairman and Dhaka Bank managing director Syed Mahbubur Rahman told New Age, ‘Despite the liquidity crisis, we have managed to do better in the first quarter of 2019.’
Mahbubur, however, said that he was uncertain whether his bank would be able to maintain the performance or not in the coming days.
Asked about the reasons for the negative cash flow of banks, he said when a section of banks managed to collect fund, the other section suffered crisis due to the scarcity of deposits.
The liquidity crisis in banks has been intensifying in last couple of months due to poor loan recovery situation following the finance minister AHM Mustafa Kamal’s announcement over providing loan rescheduling facility again to loan defaulters, bankers said.
They said that the defaulters were waiting for the formal announcement from the government to take the facility instead of paying instalments that caused more liquidity crisis in banks.
Deposit growth in the country’s banking sector was above 10 per cent in 2017.
The situation deteriorated in 2018 and the deposit growth was around 9 per cent in January and February of the year of 2018.
On the other hand, the defaulted loans in the countrys banking sector stood at Tk 93,911.4 crore at the end of December, 2018 from Tk 74,303 crore a year ago.
Apart from Rupali Bank, NOCFPS of Uttara Bank was negative Tk 18.96 in January-March this year against negative Tk 3.07 in the same period a year ago.
City Banks NOCFPS was Tk 11.56 in the quarter this year against negative Tk 0.32 in the same period last year.
Cash flow per share of Trust Bank was negative Tk 12.41, that of Mutual Trust Bank negative Tk 8.65, that of Social Islami Bank negative Tk 7.92, that of Jamuna Bank negative Tk 6.83 and that of Exim Bank negative Tk 4.
NOCFPS of IFIC Bank was negative Tk 3.30 in the quarter, that of UCB negative Tk 5.78, that of AB Bank negative Tk 5.68, that of NBL negative Tk 2.76, that of First Security Islami Bank negative Tk 1.83 and that of NCC Bank negative Tk 0.56.
As banks went for borrowing to meet liquidity crisis, the interbank call money rate increased to 4.53 per cent on May 14 this year. The rate of call money was 2.77 per cent in June last year.
Besides, banks borrowed Tk 13,475.8 crore from the central bank through repurchase agreement (REPO) in the period between July, 2018 and March 5, 2019. The entities borrowed Tk 572.86 crore in the entire 2017-2018 fiscal year.
In the fiscal year of 2016-2017, banks’ borrowing through REPO was Tk 115.67 crore.
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