The ability of a bank to meet its current obligations, the quality that makes an assets quickly and readily convertible into cash. The most liquid item is cash itself, since it does not need to be converted. Money market funds which can be immediately sold for cash. The time and demand can also turned into cash quickly. Every banking company shall maintain in Bangladesh in cash or gold or unencumbered approved securities, valued at current market price, the value of which shall not at the close of business on any day be less than the such percentage of its total time and demand liabilities as the Bangladesh bank determines from time to time. liquidity crisis Banks cannot afford to fail in payment to its customers anytime. If it happens, banks may face the risk of liquidation, such failure is called liquidity crisis. It occurs when bank is out of enough cash needed to meet its financial obligation. causes for liquidity crisis of a Bank Liquidity crisis is a dangerous & risky problem of Bank. Because of liquidity crisis bank lost its main strength. The reasons behind liquidity crisis are: o When banks give out a great portion of long-term loan compare to cash deposit. Though long-term loan is profitable but bank have to pay back the money when customer call for it. o When bank’s significant portion of loans has the chance for classification and besides this bank again give out new loan then there can be liquidity crisis. o When depositors of the bank lost their faith against bank & withdraw their money, then bank may fall in huge liquidity crisis. o If interest rate in deposit is less compare to different bank in the country & outside the country, so there is a huge possibility of liquidity crisis as because most of customer can be switch to other bank also money can be transferred from one country to another country. o different kinds of social conflict like war, internal crush, inflation, economic disaster may discourage customer from savings in the bank, which cause liquidity crisis.