Liquidity Management Practices at Janata Bank PLC”

Abstract

Janata Bank PLC, a prominent state-owned commercial bank in Bangladesh, operates within a dynamic financial landscape. Effective liquidity management is crucial for the bank's stability, resilience, and ability to support economic growth. This involves ensuring the bank has sufficient funds to meet its short-term obligations, even during periods of stress. This report examines liquidity management practices at Janata Bank PLC and their impact on the bank’s financial stability. It analyzes how the bank manages liquidity performances and risk, and how this affects the bank’s overall financial health. The report documents the liquidity sector of the bank and its influence on financial stability. The report finds that Janata Bank PLC demonstrates good liquidity status. The bank's capital management plan aims to maintain economic regulatory capital while achieving an optimal balance between return and risk. The analysis covers the bank’s liquidity performances, the economy of Bangladesh, and the current state of the bank's liquidity position. Specifically, the report delves into Janata Bank PLC's strategies for ensuring adequate liquidity, including maintaining a diversified funding base and holding a portfolio of liquid assets. It also assesses the bank's compliance with regulatory requirements set by Bangladesh Bank, such as Basel III standards. Furthermore, the report analyzes trends in key liquidity and financial stability metrics from 2015 to 2024, and explores the relationships among these indicators. Ultimately, the report provides recommendations for enhancing Janata Bank's liquidity management practices and ensuring its long-term financial soundness. The study has analyzed the liquidity position of Janata Bank PLC in the light of its financial statements, relevant statistics and ratio analysis. The report suggests that Janata Bank PLC has been successful in maintaining a good liquidity position and adhering to regulatory standards. However, it also identifies areas where the bank can make improvements. Specifically, the report advises the bank to reduce its dependence on customer deposits, which can be unpredictable, by seeking out other funding sources. Finally, the report recommends that the bank continue to invest in technology and its employees to enhance its liquidity management capabilities. The study reveals that the bank has been maintaining a satisfactory liquidity position over the period of 2015-2024. The bank has also been compliant with the regulatory requirements set by the central bank of Bangladesh. However, there are some areas where the bank can improve its liquidity management practices. The bank should focus on diversifying its funding sources to reduce its reliance on customer deposits, which are more volatile in nature.The bank should also enhance its asset-liability management (ALM) framework to better match the maturities of its assets and liabilities. This will help the bank to reduce its exposure to liquidity risk. Finally, the bank should continue to invest in technology and human resources to improve its liquidity management capabilities.