B Mirror Report: Bangladesh Bank has extended a special loan of Tk 5,000 crore to private-sector lender Premier Bank amid a liquidity crunch. The central bank provided the support two days ago after several large corporate clients suddenly withdrew significant deposits, triggering an emergency situation at the bank.
Sources at Bangladesh Bank said that of the Tk 5,000 crore assistance, Tk 1,000 crore was disbursed in cash, while the remaining Tk 4,000 crore was provided through bonds. The special facility was arranged after Premier Bank failed to raise funds from the interbank money market.
Premier Bank Chairman Arifur Rahman expressed hope that the central bank’s support would boost confidence among customers and shareholders. Speaking to Prothom Alo, he said the bank is now operating much better than before. He added that the board and management are not involved in any irregularities and are not allowing any scope for malpractice.
The loan has been granted for 90 days at an interest rate of 11.5 percent under Sections 16(4)(D) and 17(1)(B) of the Bangladesh Bank Order. In banking terms, the facility is known as an “Overnight-OD” arrangement. Against the loan, the bank has submitted an equivalent value demand promissory note. According to the conditions, if the bank is liquidated or declared bankrupt for any reason, the central bank’s dues must be repaid first through asset sales.
Earlier, five banks including Shariah-based Islami Bank Bangladesh Limited which were on a merger list, had also received similar financial assistance from the central bank.
Following the fall of the Awami League government on August 5, Bangladesh Bank reconstituted Premier Bank’s board. Since its establishment in 1999 until January 2025, the bank was chaired by HBM Iqbal. For a long period, members of his family reportedly held dominant positions on the board. Allegations suggest that large sums of money were siphoned off through fraud at several branches, including one in Narayanganj, leaving the bank in internal distress.
The liquidity situation worsened further after several major corporate entities recently withdrew their deposits. As a result, the bank failed to maintain the required Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). Under regulations, banks are required to maintain 4 percent of their total liabilities as CRR and 13 percent as SLR with the central bank.
Bangladesh Bank spokesperson and Executive Director Arif Hossain Khan said the sudden withdrawal of funds by a few large institutions pushed the bank into a liquidity crisis. He warned that if the crisis had deepened, it could have had a negative impact on the broader banking sector. To avert that risk, the central bank stepped in with support, though most of the assistance was provided through bonds, with only Tk 1,000 crore in cash.
Concerned insiders believe that irregularities and mismanagement during HBM Iqbal’s tenure contributed to the current situation. In August last year, Bangladesh Bank restructured the board, appointing founding Vice Chairman Arifur Rahman as chairman.
