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State-owned Sonali Bank has initiated a plan to place Tk 7,000 crore with National Bank for three months against a guarantee from Bangladesh Bank to strengthen the latter’s liquidity position and support its financial recovery.
The funding is expected to help National Bank address its immediate liquidity crunch and restore stability to its regular operations, according to a press release issued by Sonali Bank on Tuesday.
The release said National Bank had undertaken several strategic initiatives under its recently reconstituted board of directors and new management to recover defaulted loans, rebuild financial capacity and stabilise operations.
Against this backdrop, the fund placement, backed by Bangladesh Bank’s support and guidance, is expected to contribute positively to National Bank’s recovery efforts.
Sonali Bank said it had previously supported liquidity management and recovery efforts at various banks through fund placements against guarantees from Bangladesh Bank. The bank said it had experience recovering such investments within the stipulated periods.
As one of the country’s largest state-owned commercial banks, Sonali Bank said it prioritised financial sector stability, cooperation among banks and responsible banking practices.
The proposed funding arrangement takes into account both the need to provide liquidity support to National Bank and the management of associated risks, the release said. The placement will be governed by the stipulated tenure, Bangladesh Bank’s guarantee and relevant terms and conditions.
Sonali Bank also stressed that the effectiveness of the assistance would depend on continued progress in National Bank’s financial recovery, stronger efforts to recover defaulted loans and improvements in corporate governance.
Both banks expect the initiative to strengthen mutual trust and cooperation in the banking sector, reinforce financial stability and contribute positively to overall economic activity.