The Nationalised Commercial Banks (NCBs) have overcome their liquidity crisis, at least for the time being, through "vigorous fund management."

Till Wednesday all the four NCBs — Sonali Bank. Janata Bank, Agrani Bank and Rupali Bank — reported comfortable fund positions.

Agrani Bank had a surplus liquidity of Tk 130 crore. Rupali Tk 70 crore and Janata Bank about Tk 150 crore till Wednesday, highly placed sources in the banks told The Daily Star. Sonali Bank was also marginally above the break-even point which, its officials claimed, was "comfort-

able to run daily affairs.''

But to achieve this position, all these banks adopted a stricter term-lending programme and raised their interest rates on deposits.

The NCBs had been going through a period of liquidity crisis for the last six months as a result of mismatch in their deposit and lending activities.

As of June 12 this year, their total surplus liquidity came down to as low as Tk 27.60 crore. Sonali Bank faced a severe crisis with a shortfall of Tk 86.41 crore. Agrani Bank had only Tk 7.55 crore in excess liquidity. Janata had Tk 38.50 crore and Rupali Bank Tk 77.96

crore.

Officials of these four banks now blame the huge off-take of loans during 1994-95 as the main reason behind the liquidity crisis in the banks.

"We were forced to sanction huge amount of loans under various political pressures during that period. Now, we have to provide instalment money to these projects which drastically cut our liquidity," said a senior official of an NCB.

When this huge amount of loan sanctioning came into the notice of the finance ministry at that time, it tried to put a tab on more money coming out of the banks and a circular was issued in August. 1995. restricting sanctioning of project loans of over Tk 30 lakh. But by that time, the damage to the NCBs had been done.

Finance Minister SAMS Klbria. after taking over office had also pointed out that during 1994-95, credit sanctioning jumped by 30 per cent which he had termed abnormal.

After the AL government came to power, the circular was withdrawn, but the banks found their coffers empty to finance more projects.

The problem that the NCBs faced after sanctioning these huge loans was that they could not match their deposits, which were of short term nature, to long term project loans.

To maintain a healthy fund position, the NCBs have now gone for reigning in long term industrial loans.

Sonali Bank is now giving agriculture loans, and advances for trading while it has curbed industrial loans. Janata is disbursing instalments for old loans and providing working capital But it has decided not to spend more than ten per cent of total advances in term lending.

Agrani is also discouraging term lending and has taken a vigorous deposit mobilisation drive Officials of the bank said Its newly floated savings scheme has yielded good results. Rupall has also limited its activities in short term lending and working capital.