In a decisive move to stabilise a fluttering private lender, Bangladesh Bank (BB) has extended an emergency liquidity support package worth BDT 5,000 crore to Premier Bank. This intervention follows a period of heightened anxiety amongst depositors, which triggered a notable outflow of funds and left the institution struggling to meet its day-to-day cash requirements.
The central bank’s spokesperson and Executive Director, Arief Hossain Khan, confirmed the approval of the facility last week. However, the lifeline comes with a significant regulatory caveat: a vast majority of the funds—nearly BDT 4,000 crore—was immediately clawed back by the regulator. This deduction was made to rectify the bank’s deficit in its Statutory Liquidity Ratio (SLR), a critical prudential benchmark that the bank had failed to maintain.
Navigating Regulatory Requirements
In the Bangladeshi banking framework, the SLR is a mandatory safety net designed to protect the interests of depositors. Conventional commercial banks are legally obligated to maintain 13% of their total demand and time liabilities in liquid assets, such as cash, gold, or government-approved securities.
By falling short of this threshold, Premier Bank had effectively entered a zone of regulatory non-compliance. Consequently, the central bank’s “support” functions more as a balance-sheet correction than a fresh injection of spendable cash, as the lion’s share was earmarked to satisfy these pre-existing legal obligations.
Premier Bank: Financial Support Breakdown
| Category | Amount (BDT) | Purpose / Destination |
| Total Approved Support | 5,000 Crore | Emergency liquidity facility |
| SLR Reconciliation | 4,000 Crore | Deducted to meet mandatory reserves |
| Net Operational Infusion | 1,000 Crore | Available for immediate liquidity needs |
| Minimum SLR Requirement | 13% | Mandatory for conventional banks |
A Turbulent Governance Transition
The current liquidity crisis arrives amidst a broader shake-up of the bank’s leadership following a dramatic political shift in the country. In August last year, the central bank dissolved Premier Bank’s board of directors, installing a seven-member panel to oversee a recovery and restore public confidence.
This upheaval ended the 26-year tenure of HBM Iqbal, the bank’s former chairman and a former lawmaker for the Awami League, who stepped down in January 2025. Analysts suggest that the combination of leadership instability and the exit of politically connected figures has rattled depositor confidence, leading to the capital flight witnessed in recent months.
Despite the gravity of the situation, the bank’s current management has remained notably tight-lipped. Md Monzur Mofiz, the Managing Director (Current Charge), did not respond to multiple enquiries regarding the bank’s strategy to restore long-term stability.
As the central bank continues to monitor the situation, the focus remains on whether this BDT 5,000 crore intervention will be sufficient to stem the tide of withdrawals or if further structural reforms are required to prevent a systemic contagion within the private banking sector.