businesses-face-liquidity-crunch-in-bangladesh-post-hasina

Businesses in Bangladesh are grappling with a liquidity crunch following the central bank's new cap on cash withdrawals, set at Tk 2 lakh (approximately Rs 1.42 lakh). This limit, which increased from Tk 1 lakh, was imposed by the Bangladesh Bank due to ongoing security concerns. 

These concerns have arisen in the wake of clashes between police and students during widespread protests against the Sheikh Hasina-led government over a contentious job quota system.

The Bangladesh Bank introduced the withdrawal limit on Saturday. Interim Finance and Planning Adviser Salehuddin Ahmed, speaking on Sunday, stated that the limit is necessary due to the current situation. Police forces have yet to return to full operation, adding to the uncertainty.

Businesses, particularly those reliant on cash transactions, are experiencing disruptions. Abu Bakar Siddique, an oil wholesaler in Dhaka's Karwan Bazar, reported that his bank is restricting withdrawals to Tk 1 lakh, causing significant operational challenges. Most transactions are now being conducted through bank-to-bank transfers or cheques.

Taslim Shahriar, deputy general manager of a major commodity importer and processor, noted that while some transactions can be handled through bank transfers, not all businesses accept cheques. This has led to delays and difficulties in paying employees, especially daily wage earners.

A senior official from another major commodity importer and processor highlighted that the inability to access cash is affecting salary payments and warned of severe implications if the situation persists.

Riad Mahmud, managing director of National Polymer Group, acknowledged that while the current situation is problematic, its impact could be less severe if resolved quickly.

The unrest in Bangladesh has already claimed over 560 lives since mid-July, with more than 230 killed in violence following the fall of the Hasina government last week. An interim government has since been established, with Nobel laureate Prof Muhammad Yunus appointed as its head. Yunus announced the portfolios of his 16-member advisory council on Friday.

The ongoing crisis has intensified concerns about the stability of the economy and the functionality of the banking sector, which remains a top priority for the interim administration.