Financial crisis hit Bangladesh as banks stop circulating new currency

The crisis emerged with the political transition after the ouster of former Prime Minister Sheikh Hasina following a violent uprising last year.

The new notes in the hands of Bangladesh banks are not coming to the market because all types of money and coins feature the image of Bangabandhu Sheikh Mujibur Rahman, according to a report by the leading Bangladeshi daily, Prothom Alo.

Due to this situation, citizens are facing financial losses as they do not have access to new notes. Shops and banks are also being flooded with torn and old dirty notes.

Last month, the central bank instructed all the scheduled banks to suspend the exchange of fresh notes for the public.

The Bangladesh Bank issued directives to the branches holding fresh notes that they must refrain from exchanging them and instead keep them in reserve.

Banks were advised to complete all cash transactions using re-circulated notes. Since then, the exchange of new notes has completely stopped, and there has been a shortage of new notes in the market, according to the local media reports.

"Millions of banknotes with Bangabandhu's picture are still lying in the vaults of various banks. The mint does not have the capacity to cancel all the notes at once and print new ones. To reduce the suffering of the people, the notes that have been printed should be released into the market," said Ziauddin Ahmed, former Managing Director of Mint.

Reports suggested that following the Central Bank's directive not to issue previously printed notes, it has faced a huge financial loss, as there are about 15,000 crore Bangladeshi taka of paper notes printed with the image of Sheikh Mujibur Rahman.

Meanwhile, speaking on condition of anonymity to Prothom Alo, several officials of the central bank said that the decision was taken on the instructions of the government at a high level.

Additionally, many other bank officials told the newspaper that the sudden cessation had created a crisis in the market, and the printed money was being wasted without being used, which led to an increase in customer suffering.

Along with the banks, the ATM booths in Bangladesh also started issuing old and almost unusable notes, which further added to the suffering of customers.

"I withdrew 20,000 taka from one Bank ATM with my Dhaka Bank card. Out of these, three 1,000 taka notes are almost unusable. Now, even if I try to return these notes, the banks do not want to accept them," said a customer.