Run on banks: Panic among Depositors
Sittwe, 22 February: Traders and depositors in Myanma Economic Bank at Sittwe, capital of the western state of Burma, have been panicky as the State Central Bank issued an order two weeks ago, limiting the withdrawal to just half a million kyats a week an amount worth about 450 US dollars, according to our correspondent.
For the workshop owners and small businessmen in the city, the amount is far less than what they need to run their enterprises let alone pay the employees, a disgruntled automobile workshop owner said. The same is true with the wholesalers of cloth, toys, rice and cooking oil, and other commodities. The order also raised a number of questions and suspicion in the way private banks are run, a retired bank manager said. People are once again suspecting underhand dealings by the Burmese junta leaders in collusion with the bank authorities, and spreading speculations that the banks are facing a liquidity crisis, he added.
It all started when the private banks suspended all withdrawals the previous week, a university student told our correspondent. All money transfers were also suspended in the process. “People are hoping the worst demonetization of paper money after 1987 that will start a financial crisis to the already sick national economy,” she added.
Financial crisis is already in the offing in the
The crisis was the result of rumours about the collapse of some twenty private banks that have been facing liquidity crisis for sometime, said a private bank manager.
Across the western state the prices of essentials have once again shot up sharply: many wholesalers have stopped selling their commodities as the kyat has been jittery due to the crisis. Essential commodities have plain vanished from the shops and many business concerns are heading for bankruptcy, said an export trader. The situation is out of control now, and we are heading for another downturn in our national economy, said a bank manager.