In the first three months of this year (January-March), the cash flow of Islami Bank Limited, listed in the capital market, has become negative 7 thousand 582 crores. The negative cash flow has continued for the last eight months.
A negative cash flow means a cash crunch. A bank company does not have a problem if the short-term cash flow is slightly negative. If the cash flow is negative in the long run, it means that the bank is in trouble.
The negative cash flow at the end of September last year was Tk 1,309 crore. That means the negative cash flow has increased by around Rs 6,000 crore in the last eight months. The percentage increase is about 473 percent.
The bank’s loan amount has also decreased. At the end of March, it stood at 13 thousand 708 crores. Last year in September which was 15 thousand 612 crores.
Experts say that Islami banks are conducting transactions despite having no money in their accounts; Surviving only with the vital aid or lifeline provided by the central bank.
Last January, Bangladesh Bank moved to lend to five troubled Shariah-based banks, all of which are controlled by Chittagong-based S Alam Group. Among them was Islami Bank Limited.
According to Bangladesh Bank data, these five banks collectively had a negative balance of about Tk 14,000 crore in their current accounts on January 18, which was provided by the central bank to keep them afloat.
As of January 18, Islami Bank’s current account had a negative balance of Tk 3,500 crore.
Earlier in December last year, Islamic Bank’s financial transactions with five Shariah-based banks in the country were stopped due to funding crunch. Later, however, it was opened.
Bangladesh Bank wrote to these banks and said that the current account balance of these banks with Bangladesh Bank has been negative for a long time. Despite repeated reminders, the banks have not taken any significant steps to resolve the issue. Bangladesh Bank has now given these banks 20 days to adjust their current account deficit.
Economist and former chairman of Bangladesh Securities and Exchange Commission. AB Mirza Azizul Islam said that measures should be taken very quickly regarding Islami Bank so that they can come out of the negative situation.
He also said that private banks should be saved first to keep the country’s banking sector functioning.
