National Bank restarted routine banking operations on Thursday, enabling general depositors to withdraw cash according to their requirements.
The bank began processing deposit payouts for clients who submitted withdrawal requests over the preceding four days.
According to sources within National Bank, the distressed lender secured Tk7,000 crore in liquidity support to resume regular functions. State-run Sonali Bank provided these funds backed by a central bank guarantee.
Bangladesh Bank has applied strict guidelines regarding how National Bank may deploy the capital.
A primary stipulation prohibits using these funds to settle deposits belonging to present or former bank directors, nor can the money be disbursed as loans.
The central bank outlined these directives in a official communication sent to National Bank’s managing director on Monday.
The notice specified that the liquidity assistance carries a 10% interest rate with a maturity period of three months.
In the interim, the lender gathered cash withdrawal requests from clients between October 11 and 14 to gauge overall liquidity demand.
National Bank sources indicated that roughly 11,000 customers applied to withdraw a combined total of Tk2,000 crore across those four days.
Branches nationwide submitted their depositors' requests to the head office, which subsequently supplied the necessary cash.
As an initial measure, the bank was directed to clear withdrawal requests from savings and current account holders over the coming days, with other client categories receiving payouts in later phases.
11 conditions
National Bank must adhere to 11 central bank conditions governing the usage of these funds raised under the central bank guarantee to satisfy depositor claims.
Among these rules, the bank cannot declare cash dividends until the assistance package is fully repaid.
Furthermore, the money cannot be channeled toward loans or investments for current or former directors, or any entities connected to them.
The capital must not be used to refund deposits registered to past or present directors—whether directly or via indirect channels—nor can it back new credit approvals or increase existing credit facilities.
Even previously sanctioned but undisbursed loan amounts cannot be released using this liquidity.
Bangladesh Bank additionally barred using the capital to settle existing interbank obligations or placements, buy out loans or investment portfolios from peer banks, or purchase foreign currency to meet letter of credit obligations linked to forced loans or loans against trust receipts (LTRs).
Depositing the funds into other financial institutions is likewise forbidden.
For the duration of the guarantee, all newly mobilized deposits must be allocated exclusively toward improving the bank's overall liquidity and fulfilling commitments to general depositors.
Operating costs cannot grow by more than 5% year-over-year, and the guaranteed capital cannot be applied toward administrative or operational expenditures.
National Bank is required to submit weekly usage reports to the central bank detailing how the funds are deployed.
Data from National Bank indicates that as of October 12, total deposits stood at Tk33,515 crore, while outstanding loans reached Tk43,230 crore. This resulted in an advance-to-deposit ratio (ADR) of 132%.
Under Bangladesh Bank regulations, commercial banks may lend up to Tk87 for every Tk100 in deposits, placing the maximum allowable ADR ceiling at 87%. By the end of June, nearly 66% of National Bank’s total loan portfolio was classified as non-performing loans.
Latest accounting figures reveal that National Bank’s cumulative borrowings from Bangladesh Bank and other financial institutions—including funds secured through central bank guarantees—total approximately Tk26,000 crore.
Sikder Group held management control over National Bank from 2009 through 2023. Extensive financial irregularities during this timeframe caused substantial losses, pushing the institution into acute financial distress.