Sonali Bank lends National Bank Tk7,000cr amid rush of withdrawal requests
National Bank has secured the three-month loan at 10% interest against a 100% Bangladesh Bank guarantee, while around 7,500 withdrawal requests were submitted in three days.
State-owned Sonali Bank has lent Tk7,000 crore to financially distressed private lender National Bank at an interest rate of 10% for three months, backed by a 100% guarantee from Bangladesh Bank.
Meanwhile, National Bank received around 7,500 withdrawal requests over the past three days, although the total amount sought was significantly lower than the bank's estimates, said its Chairman Melita Mehzabeen.
The bank has been accepting withdrawal requests from customers with deposits exceeding Tk1 lakh since 11 October to assess their demand for funds.
Speaking to The Business Standard today (13 October), Melita said National Bank would resume full and normal banking operations from 15 October 2026.
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She expressed gratitude to customers for their patience and continued trust despite the bank's prolonged difficulties.
National Bank has sent SMS notifications to around 1.25 million customers explaining how to submit withdrawal requests at branches and providing the necessary instructions. It has also launched a hotline to provide information and assistance.
The bank is arranging to distribute sufficient cash across its 221 branches and 65 sub-branches. Adequate cash will also be available at its 53 ATMs so customers can withdraw money according to their needs, she said.
Melita added that National Bank was preparing to receive remittances through its own remittance houses and branches in Malaysia, the Maldives and Singapore. Although these institutions had received recognition for their contributions to remittance transfers, liquidity constraints had meant that most remittances sent through them were not routed via National Bank.
The bank is now prepared to ensure that beneficiaries receive remittances on time if the funds are channelled through it, she said.
According to Melita, National Bank is trying to manage its operations using its own funds under Bangladesh Bank's guidance. The central bank has assured it of support if needed, while other financial institutions may also provide assistance when required.
However, transactions will not resume in accounts frozen or restricted under applicable government or Bangladesh Bank regulations. Transactions in dormant accounts or accounts with outdated know-your-customer (KYC) information will also remain suspended until the required procedures are completed.
She also expressed hope that depositors would keep their money with the bank after receiving interest on their deposits rather than withdraw funds before maturity.
A Bangladesh Bank spokesperson told TBS that the central bank had instructed National Bank to take the necessary steps to return depositors' money.
"The governor has assured the bank that Bangladesh Bank will provide support if it faces difficulties while implementing these measures," the spokesperson said.
Under the guarantee arrangement, Bangladesh Bank will reimburse Sonali Bank within three working days if National Bank fails to repay the loan at maturity.
Sonali Bank Managing Director Shawkat Ali Khan said the bank had extended the liquidity support in line with Bangladesh Bank's initiative to restore confidence in the banking sector.
He said the central bank's 100% guarantee ensured that Sonali Bank would be reimbursed within three working days if National Bank failed to repay the loan at maturity, leaving Sonali Bank exposed to no risk.
He added that similar financing had previously been extended to Islamic banks against guarantees from the central bank.
National Bank struggles with financial distress
National Bank was once among the leading private-sector banks in Bangladesh. After the Awami League government came to power in 2009, major changes were made to the bank's board, and control subsequently passed to the Sikder family.
The bank underwent another board change following the fall of the Awami League government on 5 August 2024. However, it has yet to recover from irregularities and alleged financial plundering during the Sikder family's tenure.
A high volume of non-performing loans has weakened its financial indicators. The bank has continued to incur losses and struggled to meet depositors' withdrawal demands.
Bangladesh Bank has also provided substantial liquidity support to keep the loss-making lender afloat. Despite the assistance, the bank's normal transaction activities have yet to improve significantly.
Recently, four National Bank depositors approached the High Court after failing to withdraw their deposits. The court subsequently directed Bangladesh Bank to ensure that the depositors could withdraw money from their savings accounts.
Against this backdrop, National Bank Chairman Melita Mehzabeen and acting managing director Zahidul Haque met Bangladesh Bank Governor Md Mostaqur Rahman on 8 October.
During the meeting, Melita said recent measures taken by the central bank had helped establish good governance at National Bank. She also said positive changes had been introduced in loan management to improve efficiency and operational capacity.
The governor said the bank's liquidity position and its ability to meet depositors' withdrawal demands were being treated as priorities. He instructed the bank to take the necessary measures to protect depositors' interests, maintain confidence in the banking system and ensure orderly operations.
He also directed the bank to ensure that all depositors could withdraw money according to their needs from 15 October.
Central bank's exposure to National Bank
Earlier, National Bank borrowed Tk985 crore from several banks but failed to repay the money within the stipulated period. Bangladesh Bank subsequently settled the liability, turning the amount into a debt owed by National Bank to the central bank.
National Bank currently owes Bangladesh Bank Tk10,568 crore. The entire amount was provided by the central bank through the creation of new money, according to the information provided.
Banking sector insiders say Bangladesh Bank is facilitating loans from other banks against central bank guarantees to support lenders facing liquidity shortages.
While such assistance can help address immediate cash shortages, a lasting recovery will be difficult unless loan recovery improves and distressed banks strengthen their financial positions.
