The commercial banks on Wednesday borrowed Tk 5,000 crore from the central bank through Repo (repurchase agreement) and the call money market to meet their increasing liquidity crisis, banking sources said.
The Bangladesh Bank has injected Tk 3,000 crore in the banking sector at 8.7 per cent interest while the banks have borrowed Tk 2,000 crore at eight to 13 per cent interest from the call money market to counteract their liquidity crisis.
‘Banks are facing liquidity crisis as the money which went out of them in the run up to the national polls has not returned yet,’ said a senior official of the BB.
The official also said the banks’ demand for liquidity might be over after the January 22 upazila elections.
Besides, at least nine private commercial banks have already increased their interest rates on deposit by 0.50 to 1.50 per cent to collect more funds from their clients to meet their liquidity crunch.
On another front, local importers are reluctant to import commodities like rice, pulse, onion, and edible oil, resulting in a decline in letter of credit settlements, meaning fund inflow.
The LC settlement growth for import reduced by 30 per cent in December 2008 compared to same month in 2007. The growth posted a 19.14 per cent increase in July 2008 from that in July 2007.
According to banking sources, due to the global financial meltdown, local commercial banks have diverted their deposits from western banks to Asian ones, which also added to the cash crisis by fetching lower incomes.
Agrani Bank Limited chief executive officer Syed Abu Nasir Bukhtear Ahmed told New Age the demand for liquidity of commercial banks had increased day by day, but it was not a liquidity crisis.
He, rather, argued that the reducing call money and deposit rates meant the banks had surplus liquidity.
Bangladesh Institution of Development Studies research director Zaid Bahkt said the liquidity crisis in the banking sector would stabilise after the upazila elections, as most of the money invested for polls camp
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