Bangladesh: Central bank limits cash withdrawal, affects businesses

The Bangladesh Bank, which is the central bank of the nation, has limited withdrawal of cash from banks in the country to Tk 2 lakh (two lakh Bangladeshi taka) per account in the wake of the ongoing political chaos. As a result, businesspersons and business houses are threatened with liquidity crunch, according to a report in the press on Monday.

The current withdrawal limit of Tk 2 lakh, roughly corresponding to Rs 1.42 lakh in Indian currency, was finalised on Saturday, revising the central bank’s earlier decision to set the limit at Tk 1 lakh.

While the decision to limit cash withdrawal was considered a necessary security measure, businesses are bearing the brunt, especially ones that primarily conduct trade through cash dealing, the Dhaka-based The Daily Star newspaper reported. According to businesspersons, trade operations had largely slowed down or come to a halt around the middle of July when the ongoing political crisis started in country.

The Bangladesh Bank’s decision to limit cash withdrawal came in the wake of the volatile law and order situation in the riot-torn country. Violent students body protests, for more than three weeks over a controversial job reservation system, have left more than 550 dead, while former Prime Minister Sheikh Hasina Wazed fled the country to seek refuge in India. Nobel Peace Prize laureate Muhammad Yunus was subsequently invited to lead a new interim government. Meanwhile, the situation in Bangladesh is yet to return to normal. As clashes between students and the police continues, there have also been reports of fatal attacks on Indians and Hindu temples.

The Bangladesh Bank decision is in sync with Interim Finance and Planning Adviser Salehuddin Ahmed’s announcement on Sunday that cash withdrawal limit from banks was necessary under the present circumstances.