State-owned Sonali Bank is set to extend a Tk 10,000 crore loan to National Bank as the financially troubled lender seeks to overcome its liquidity difficulties and resume 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 repay depositors and meet customers’ withdrawal requests.
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 financial difficulties. The proposed support has since been reduced to Tk 10,000 crore, sources said.
Under the proposed 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 arrangement is intended to provide the lender with additional liquidity without a direct transfer of funds from the central bank to National Bank.
Sources familiar with the matter said Bangladesh Bank wanted to give National Bank an opportunity to recover from difficulties associated with past irregularities and its weakened financial position. The proposed financing is expected to help the bank meet depositors’ demands and support the restoration of its regular services.
However, the effectiveness of the arrangement will depend on how the funds are managed, the timing of disbursements and the bank’s ability to meet its financial obligations. The precise terms of the loan, including its repayment schedule, have not been disclosed in the information available.
Depositors expected to access their money from 15 October
The proposed loan comes as National Bank prepares to resume repayments 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 accepting 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 make all its branches and automated teller machines (ATMs) operational from 15 October. Branches are collecting information about customers’ withdrawal requirements to help assess demand and arrange the necessary 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 indicates that the bank intends to make the withdrawal process more accessible as it prepares to resume regular banking services.
For depositors, the key concern will be whether the bank can meet withdrawal requests according to the announced timetable. Its ability to maintain adequate cash reserves while managing other financial commitments will be important to the smooth implementation of the plan.
Bank hopes to meet demand using 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 said the bank was managing its cash requirements based on applications and that the central bank had assured it of support if necessary.
The position suggests that the immediate need for external financing will depend partly on the volume of withdrawals and the resources available to National Bank. If demand rises sharply, the bank may require additional liquidity to honour customers’ requests while maintaining its other services.
Liquidity is essential to the day-to-day operation of a bank, allowing it to process withdrawals, settle payments and meet short-term obligations. A shortage can create difficulties even when a bank holds assets that cannot readily be converted into cash. For a lender already facing financial pressure, managing these competing demands can be particularly challenging.
The proposed loan could help ease that pressure, although the extent of the benefit will depend on the availability of the funds and the scale of customers’ needs.
Financial discipline remains essential to recovery
The proposed Tk 10,000 crore loan could provide National Bank with significant short-term support. However, additional funding alone may not resolve the underlying problems that contributed to its financial difficulties.
The bank will need to strengthen financial discipline, manage its assets and liabilities effectively and ensure that the funds are used for their intended purposes. Greater transparency and sound oversight will also be important in rebuilding confidence among depositors.
Bangladesh Bank’s role as guarantor is central to the proposed arrangement, while Sonali Bank is expected to provide the actual loan. Although the funding is intended to support deposit repayments and the resumption of normal operations, detailed information about the instalment schedule and repayment conditions has not been made public in the available account.
The planned return of depositors’ money could help restore confidence in National Bank, particularly among customers who have been waiting to access their savings. Yet sustained confidence will depend on whether the bank can deliver reliable services and meet its obligations consistently.
The proposed financing therefore represents an important step in National Bank’s efforts to address its liquidity difficulties. Its longer-term recovery will depend on the effective use of the loan, stronger financial management and sustained efforts to protect depositors’ interests.
