Major Liquidity Injection Arranged as Distressed Lender Prepares to Reopen Counters

Sonali Bank has extended a large three-month liquidity facility of Tk 7,000 crore to National Bank at an interest rate of 10 percent, backed by a full guarantee from Bangladesh Bank. The arrangement is designed to allow the private-sector bank to resume ordinary operations and begin honouring customer withdrawal requests from 15 October. Under the terms of the guarantee, Bangladesh Bank will reimburse Sonali Bank within three working days if National Bank is unable to repay the sum at maturity, ensuring that the state-owned lender carries no residual credit risk on the transaction.

In the days immediately before the facility was finalised, National Bank received approximately 7,500 withdrawal applications from depositors whose balances exceeded Tk 1 lakh. The bank had started accepting these applications as a way to gauge the scale of immediate cash demand. Its chairman, Melita Mehzabeen, has stated that cash will be distributed across branches and ATMs so that customers can withdraw according to their requirements once full services restart. SMS notifications were sent to a large portion of the customer base explaining how to submit requests, and a dedicated hotline was activated to handle enquiries.

The support follows instructions from Bangladesh Bank that National Bank must make funds available to ordinary depositors from mid-October. Accounts that remain frozen under regulatory or court orders, or that lack updated know-your-customer documentation, will continue to be restricted. Sonali Bank's managing director, Md Shawkat Ali Khan, has described the placement as consistent with the central bank's efforts to restore depositor confidence and has noted that similar guarantee-backed support has been used for other institutions in recent periods.

National Bank's current difficulties stem from a prolonged period of financial weakness. The bank has posted successive losses, carries a heavy burden of non-performing loans, and has struggled for some time to meet withdrawal requests in full. Earlier assistance from the central bank had already created substantial outstanding claims on the institution. In recent weeks, several depositors who were unable to access their funds approached the courts, which directed Bangladesh Bank to ensure that money could be withdrawn. A subsequent meeting between National Bank's senior management and Bangladesh Bank Governor Md Mostaqur Rahman accelerated the process that led to the present facility.

For Sonali Bank the transaction is essentially risk-free because of the central bank's guarantee. For National Bank the three-month window offers temporary relief while it processes pending withdrawals and attempts to rebuild public trust. Longer-term recovery, however, will depend on improved loan recovery, tighter credit discipline, and stronger internal controls. Banking sector observers point out that repeated emergency liquidity support, even when fully guaranteed, cannot by itself resolve underlying asset-quality problems. Without meaningful progress on recovering distressed loans and reducing operating losses, the bank may continue to require external assistance.

The episode also reflects broader stresses in parts of Bangladesh's private banking system, where a limited number of institutions still face acute liquidity and solvency pressures. Regulators have made clear that protecting depositors remains the immediate priority, while structural improvements in governance and loan recovery are necessary for sustained stability. Whether the Tk 7,000 crore facility proves adequate will become clearer once National Bank's branches and ATMs reopen on 15 October and the actual volume of withdrawals is known. In the meantime, the arrangement stands as one of the larger short-term support measures extended to a single private bank in the current phase of sector-wide challenges.