State-owned Sonali Bank is set to provide a Tk 10,000 crore loan to National Bank to help the private lender overcome its financial difficulties and restore normal banking operations. Bangladesh Bank will guarantee the loan, which is expected to be disbursed in several instalments. A substantial portion of the funding is intended to help National Bank repay depositors and meet customers’ withdrawal demands.
The development was reported by sources at Bangladesh Bank on Monday, 12 October.
According to several sources, National Bank had initially sought Tk 20,000 crore in financial assistance from the central bank to address its liquidity crisis. The proposed support has since been reduced to Tk 10,000 crore, sources said. Under the arrangement, Bangladesh Bank will not provide the funds directly to National Bank. Instead, it will act as guarantor for the loan extended by Sonali Bank.
The proposed financing is intended to give National Bank additional liquidity as it attempts to address its financial difficulties and rebuild confidence among depositors. The bank has faced challenges associated with past irregularities and its weakened financial position, according to sources familiar with the matter.
The initiative is expected to provide short-term relief, particularly if the funds can be used to meet withdrawal requests and support the resumption of routine banking services. However, the effectiveness of the arrangement will depend on the terms of the loan, the timing of disbursements and how efficiently the money is managed.
Depositors expected to withdraw money from 15 October
The proposed loan comes as National Bank prepares to resume payments to depositors and restore normal operations across its branch network.
Recently, the bank’s chairman, Professor Melita Mehjabeen, and its acting managing director met Bangladesh Bank Governor Md Mostakur Rahman. According to sources familiar with the meeting, instructions were given to begin returning depositors’ money from 15 October.
National Bank subsequently began collecting withdrawal applications on Sunday, 11 October. The application process is scheduled to continue until Wednesday, 14 October, with depositors expected to be able to withdraw their money from Thursday, 15 October.
Professor Mehjabeen said the bank planned to reopen all its branches and ATMs from 15 October. Branches are collecting information about customers’ withdrawal requirements to help the bank assess demand and arrange sufficient cash.
She also said that, from 20 October, all customers would be able to receive their money without submitting an application in advance. The announcement signals the bank’s intention to make the withdrawal process more accessible as it prepares to resume regular services.
For depositors, the implementation of this timetable will be a key test of the bank’s ability to meet its commitments. The availability of cash, the volume of withdrawal requests and the bank’s capacity to manage its other financial obligations will all influence how smoothly the process proceeds.
Bank hopes to meet withdrawal demand from its own funds
Professor Mehjabeen said many depositors were not currently seeking to withdraw their money, resulting in a relatively low number of applications so far.
She added that National Bank was preparing to resume normal banking activities and was arranging cash according to the withdrawal requests received from customers.
According to the chairman, the bank would not need assistance from Bangladesh Bank if it could meet depositors’ demands using its own funds. She also said the central bank had assured the lender that support would be available if required.
The position suggests that the immediate need for external financing will depend partly on the level of withdrawals and the resources available to National Bank. If customers seek to withdraw larger sums than anticipated, the bank may need additional liquidity to honour those requests while maintaining its other banking services.
Careful cash management will therefore be essential. Banks must balance customers’ immediate needs against the requirement to maintain sufficient funds for day-to-day transactions and other obligations.
Recovery will require more than additional liquidity
The proposed Tk 10,000 crore loan could provide National Bank with substantial short-term support. However, access to additional funding alone may not resolve the underlying problems that contributed to its financial difficulties.
The bank will need to maintain financial discipline, manage its assets and liabilities effectively and ensure that the funds are used for their intended purposes. Strong oversight and transparent financial management will also be important in restoring confidence among depositors.
Bangladesh Bank’s role as guarantor is central to the proposed arrangement, while Sonali Bank is expected to supply the actual loan. Details of the instalment schedule, repayment terms and other conditions have not been disclosed in the information provided by the sources.
For customers, the immediate priority is access to their deposits. The bank’s ability to meet withdrawal requests in line with its announced timetable could help rebuild trust, although sustained confidence will depend on the reliability of its services over time.
The proposed financing marks a significant step in National Bank’s efforts to address its liquidity difficulties. Its longer-term recovery, however, will depend on the effective use of the loan, stronger financial management and consistent efforts to protect depositors’ interests.
