Due to its liquidity problems, the Bangladesh Bank granted Islami Bank Bangladesh Limited (IBBL) a special loan of Tk 80 billion (8,000 crore), which is a unique advantage.
In fact, the crisis is so bad that the bank was unable to keep the cash reserve ratio (CRR), which specifies the minimum amount of deposits a commercial bank must retain as reserves with the central bank, for a total of 24 days in November and December of 2022. As a result, the bank is now subject to fines.
Without accepting any deposits of Sukuk (Islamic bonds or “Sharia-compliant” bonds), the central bank provided the IBBL with this facility at an interest rate of 8.75 percent. Typically, Shariah-based banks borrow money from the Bangladesh Bank by depositing Sukuk and Islamic Bonds issued by the Bangladeshi Government (BGIIB).
However, the Islami Bank’s redeemable bond has expired. That is why, despite the Shariah-based banks’ lack of access to the benefit of borrowing money at a set interest rate, the central bank used its unusual prerogative to lend the money to IBBL.
On December 29, 2022, Mohammed Monirul Moula, managing director (MD) of Islami Bank, requested this special money in a letter to the central bank.
Within a few hours of receiving the application, the Bangladesh Bank approved it, and on the last working day of 2022, the funds were disbursed. As a result, the Islami Bank was able to present its financial statements in a situation that was somewhat better than it actually was.