Government firmly pledges 200 crore dirham capital support to keep Janata Bank running in the UAE

The government has given a 'firm commitment' to provide capital support of 200 crore dirham — about Tk 6,706 crore in Bangladeshi currency — to keep the operations of state-owned Janata Bank running in the United Arab Emirates (UAE).

Finance Secretary Md. Khairuzzaman Mozumdar recently sent a formal letter of commitment to the governor of the UAE central bank on behalf of the government, announcing the move to strengthen the bank's financial base.

Earlier, more than Tk 1,000 crore, or 30 crore dirham, was provided in a first phase to meet the UAE central bank's conditions regarding the capital shortfall. But the UAE central bank, not satisfied with merely covering the branches' shortfall, imposed further specific conditions after looking at the overall financial picture of the parent bank. It is against this backdrop that the finance ministry has now formally assured this large new injection of capital.

It is learnt that the UAE central bank had earlier ordered Janata Bank to wind down its branch operations in the country because of the paid-up capital shortfall. Under the country's rules, the branches were required to hold 40 crore dirham in paid-up capital, but they held only 10 crore dirham.

Later, following the government's urgent intervention and the transfer of funds equivalent to Tk 1,000 crore, the operations of the four branches in Abu Dhabi, Dubai, Sharjah and Al Ain were saved for the time being.

Officials said the big decision has now been taken to improve the financial condition of the head office of the bank, which has been serving expatriates since 1976.

The Finance Division said the commitment will be fully implemented in consultation with Bangladesh Bank and the relevant authorities, in compliance with the necessary laws and procedures.

Janata Bank's branches play a very important role for the hundreds of thousands of expatriate Bangladeshis living in the UAE — in sending remittances, operating savings accounts, investing in bonds and opening letters of credit for trade between the two countries.

Had the branches closed, expatriates' banking services would have been disrupted and an important channel for sending remittances through legal routes would have shrunk. The government has taken the step with the highest priority to protect the two countries' longstanding economic partnership and the interests of expatriates.

Officials hope that once the capital injection process is completed under the new commitment, the operations of Janata Bank's four branches in the Emirates will be stabilised for the long term.