Bangladesh Bank has rejected social media reports about a mass withdrawal of deposits from banks as a ‘conspiracy’ and stated that the banking system now boasts excess liquidity of Tk 1.69 trillion.
In a press conference on Monday, the central bank said the banking system in the country has remained ‘very strong' and is not facing any liquidity crisis.
The social media campaign about the withdrawal of deposits had a snowball effect, leading to liquidity crisis rumour across the country, Bangladesh Bank spokesperson Md Abul Kalm Azad told the press gathering.
He said social media and other similar platforms added fuel to the fire amplifying the effect. “In the process, many people, businessmen and servicemen alike questioned the authorities.”
The financial sector regulator also refuted media reports that claimed commercial letters of credit (LC) opening has remained suspended.
Calling the reports ‘not correct’, the central bank said LC opening in the first 10 days in November this year reached US$ 1,263 million, $31 million higher than the figure of the same corresponding period last year.
LC opening in the whole of October this year stood at a staggering $4,743 million, it further said in a statement given at the conference.
Azad said Bangladesh Bank has imposed no restrictions on commercial LC opening. “Banks are opening LCs based on their usable foreign exchanges and will continue it,” he said.
To a question, the spokesperson said in the 51 years of Bangladesh's history, never had any bank closed its operation nor will it happen in the future.
He added that Bangladesh Bank has fully supported all banks vigorously and has its Assured Liquidity Support Policy in place for redundancy.
According to him, the central bank has communicated with all banks ensuring a stable situation in an attempt to find any issues regarding liquidity.
Azad said the central bank is extending dollar support and will keep it up for government LCs for imports in priority sectors and of urgent commodities to maintain economic stability by keeping the country's energy and food security unaffected.
He said Bangladesh Bank has supported the banks by providing official guidelines on LC opening proceedings.
The central bank blamed the Ukraine-Russia war situation for the current economic instability. “Furthermore, there has been a sudden increase in under-invoicing and over-invoicing with reports detecting a 20 percent to 200 percent rise in cases which jumped after the pandemic,” Azad added.