Letter to 5 Shariah-based banks creates misunderstanding

Bangladesh Bank has confirmed that it has issued a letter to five Shariah-based banks asking them to restraint from transactions.

However, the final decision has not been taken yet, said Mezbaul Haque, Executive Director and spokesperson of the central bank.

In an urgent press briefing at Bangladesh Bank headquarters on Sunday, the spokesperson said it has issued the letter as part of the regular operation of the central banks Motijheel office.
The five banks are Islami Bank, First Security Islami Bank, Social Islami Bank, Global Islami Bank, and Union Bank.

These banks are offering double benefits and other lucrative profit-sharing offers to depositors to beef up liquidity crisis.

But clients are reluctant as the banks are mired in several loan scams, banking sector insiders said.

Mezbaul Haque, however in a statement later clarified that the Motijheel office had misrepresented the letter sent to five Shariah-based banks.

While the letter stated concerns about the negative status of current accounts with Bangladesh Bank, Mezbaul emphasized that it does not imply an impending cancellation of clearing platform services.

He assured that no such decision has been taken and ongoing transactions will continue despite negative current account balances. The central bank has not announced any immediate stoppage of services.

Mezbauls clarification aims at removing any misunderstanding regarding the current situation and the banks clearing platform services.

On Friday, several media reports said transaction services of these five banks are about to be rescind due to current account deficits. Some of these banks however claimed the reports are not true.

Bangladesh Bank arranged an urgent press conference to clear the matter  involving the five Islami banks. Of them, Islami Bank Bangladesh PLC is the highest deposit holding bank in the private sector.

Mezbaul said, "The current account status of Bangladesh Bank with these banks has been negative for a long time. Banks have not taken any significant action despite being repeatedly informed about the matter."

As a result, the central bank has set a period of 20 days for adjusting their negative balance of current account.

Bangladesh Bank said that if the negative current account balance is not adjusted within 20 days, the five Islami banks will be prevented from clearing or settlement arrangements.