National Bank Begins Repaying Depositors After Tk 700 Billion Bailout From Sonali Bank With BB Guarantee

💰 National Bank resumed normal banking operations on Thursday, allowing ordinary customers to withdraw their deposits according to their needs. The bank began returning deposits on 15 October 2026 to customers who had applied for withdrawals over the past four days. According to National Bank sources, the financially troubled bank has secured Tk 700 billion in funding to resume normal operations, with state-owned Sonali Bank providing the funds against a guarantee from Bangladesh Bank.

📊 The central bank has imposed a set of strict conditions on how National Bank can use the money. One of the key conditions is that the funds cannot be used to repay deposits held by any former or current director of the bank. Nor can the money be used to extend loans. Bangladesh Bank issued these instructions in a letter to National Bank''s managing director on Monday, stating that the liquidity support will carry an interest rate of 10 per cent and have a tenure of three months.

🏛 Customer withdrawal applications

National Bank collected withdrawal applications from customers between 11 and 14 October 2026 to assess their needs. According to National Bank sources, nearly 11,000 customers submitted applications to withdraw a total of Tk 200 billion over the four days. Branches across the country reported customers'' withdrawal requests to the head office, which then supplied them with the necessary funds. Initially, the bank has been instructed to repay applicants'' deposits held in current and savings accounts over the next few days. Other customers will receive their money in phases at a later stage.

National Bank Managing Director Mohammad Abu Zafar told Prothom Alo that pressure on withdrawals had already eased following changes in the bank''s board and management. Import business had also begun to pick up, he said, adding that the gap between deposits and withdrawals was now relatively small. "From today, we will return money to customers according to their needs," he said.

⚠ The 11 strict conditions

National Bank must comply with 11 conditions imposed by Bangladesh Bank on the use of the funds borrowed against the central bank''s guarantee to repay depositors:

• ✅ No director-related transactions: Funds cannot be used to repay deposits held by any former or current director, or to provide loans or investments to directors or institutions in which they have an interest.
• ✅ No cash dividends: The bank cannot pay cash dividends until the loan has been repaid.
• ✅ No new lending: Funds cannot be used to extend new loans or investments, or increase existing loans.
• ✅ No release of undisbursed loans: Even the undisbursed portions of previously approved loans cannot be released using this money.
• ✅ No interbank settlements: Funds cannot be used to settle existing interbank liabilities or placements, or acquire loans or investments from other banks.
• ✅ No foreign currency for forced loans: Funds cannot be used to purchase foreign currency to meet letters of credit obligations against forced loans or loans against trust receipts (LTRs).
• ✅ No deposits with other banks: The money cannot be deposited with another bank.
• ✅ Operating expenses cap: The bank''s operating expenses cannot increase by more than 5 per cent compared with the previous year, and the guaranteed funds cannot be used to cover operating costs.
• ✅ New deposits for liquidity only: While the guarantee remains in force, newly collected deposits must be used solely to improve the bank''s liquidity position and meet obligations to ordinary depositors.
• ✅ Weekly reporting: National Bank must report to the central bank every week on how the guaranteed funds are being used.
• ✅ Three-month tenure: The liquidity support carries a 10 per cent interest rate and a three-month tenure.

💰 National Bank''s financial position

According to National Bank''s data, as of 12 October 2026, its deposits stood at Tk 335.15 billion, while outstanding loans totalled Tk 432.30 billion. This put its advance-to-deposit ratio (ADR) at 132 per cent — far above the regulatory limit of 87 per cent. Under Bangladesh Bank''s rules, a bank can lend up to Tk 87 against every Tk 100 in deposits, meaning National Bank''s lending was more than 50 per cent above the regulatory cap.

At the end of June 2026, nearly 66 per cent of National Bank''s disbursed loans were classified as defaulted — a staggering figure that reflects the depth of the bank''s asset quality problems. According to the latest figures, National Bank''s total borrowing from Bangladesh Bank and other banks, including funds obtained against guarantees from the central bank, stands at approximately Tk 260 billion.

👥 Sikder Group legacy

The Sikder Group controlled National Bank from 2009 to 2023. During that period, various financial irregularities took place, leaving the bank with substantial losses and in severe financial distress. The bank''s current troubles — including the 66% default ratio and 132% ADR — are the legacy of that period of mismanagement and related-party lending.

The Bangladesh Bank''s conditions on the bailout funds reflect a clear determination to prevent any continuation of the practices that got National Bank into trouble in the first place. The ban on director-related transactions, the prohibition on new lending, and the cap on operating expenses all aim to ensure that the Tk 700 billion bailout is used solely for its intended purpose: repaying ordinary depositors and restoring confidence in the bank.

🌏 Broader banking sector context

The National Bank bailout comes at a moment when Bangladesh''s banking sector is under significant stress. The sector''s non-performing loan ratio is around 33 per cent — well above the IMF''s previous target of 10 per cent — and several other banks are facing financial difficulties. Sammilito Islami Bank, which was also in distress, has also been receiving central bank support, with depositors being repaid in stages.

Bangladesh Bank''s intervention in National Bank demonstrates a more proactive approach to bank resolution than has historically been the case. Rather than waiting for a bank to collapse entirely, the central bank is providing targeted liquidity support with strict conditions that protect ordinary depositors while preventing further misuse of funds. This approach is aligned with international best practice for bank resolution, and it sends a signal to other distressed banks that bailouts come with serious strings attached.

🤝 Implications for depositor confidence

For National Bank''s depositors, the resumption of withdrawals is a major relief. The four-day period during which customers had to submit withdrawal applications was a moment of significant anxiety — particularly for businesses that depend on the bank for working capital and trade finance. The fact that the bank has now resumed normal operations, with sufficient liquidity to meet customer demands, should help restore confidence in the institution.

However, the deeper question of National Bank''s long-term viability remains unresolved. With 66 per cent of its loans classified as defaulted and an ADR of 132 per cent, the bank''s balance sheet is fundamentally broken. The Tk 700 billion bailout provides short-term liquidity, but it does not address the underlying asset quality problems. A meaningful long-term solution will likely require a more comprehensive restructuring, including significant recapitalisation, balance sheet clean-up, and operational transformation.

The Bangladesh Bank''s weekly reporting requirement on use of the bailout funds will be closely watched. If the conditions are properly enforced, they should prevent any further misuse of funds while providing depositors with the access to their money they need. But the bigger test will come when the three-month tenure of the liquidity support expires — and National Bank needs to demonstrate that it can stand on its own feet without continued central bank support.