The demand for taka has soared ahead of the Eid, but has failed to make much impact on the currency market, as call money rates has not significantly increased.Bankers are not attaching any significance to the meagre one to one-and-half percent rise in the call money rates over the past few days because they think it is normal.
According to Bangladesh Bank statistics, on Monday the banks had disbursed loans at 8 percent interest – the highest in recent times.
However, some non-banking financial institutions have borrowed money from the banks at 9 percent interest.
The interest paid on the money banks borrow for a day from each other or other financial institutions to maintain the cash reserve ratio is known as call money rate.
Generally, ahead of the Eid, call money rates soar on rush for withdrawal to meet festivity purchases that deplete the cash reserve of banks.
According to an official of Bangladesh Bank’s debt management department, Mercantile Bank Ltd has on Monday borrowed the most from the currency market.
It took Tk 7.65 billion at an interest rate of 8 percent.
Eastern Bank borrowed Tk 3.5 billion, South East bank Tk 2.5 billion and National Bank Tk 1 billion.
The leading lenders were state-owned Sonali Bank, Janata and Rupali banks.
Private sector banks like Citibank, HSBC, Dutch-Bangla and United Commercial Bank Limited topped the charts for disbursing the loans.
Considering that Wednesday is the last banking day ahead of Eid, the Monday rush for the cash withdrawals from the bank were huge.
But that did not push up the call rate very much.
The Chief Economist of the Bangladesh Bank Hassan Zaman told the bdnews24.com “For various reasons there is adequate liquidity in the market. The Bangladesh Bank has been helping the commercial banks to maintain the cash flow by offering special repos. This has stabilised the currency market.”
According to a Bangladesh Bank statement, during the first five days of the current month, the Central Bank has boosted circulation of money by Tk 35.34 billion.
Updated statement of the Bangladesh Bank showed a banking sector surplus of Tk 720 billion.
Of this, Tk 500 billion was invested in various government bills and bonds.
Banks were free to invest the remaining around Tk 220 billion, but it could not do so for weak demand.
The Managing Director of the Pubali Bank and Vice Chairman of ABB Helal Ahmed Chowdhury told bdnews24.com, “Due to the surplus cash in the banks, the demand for call money is less this year. That is why even the interest rate is stable.”
Three years ago, on December 19, 2010, banks and other financial institutions had to borrow money at a whopping 190 percent interest due to acute shortage of cash.
From since last year the situation has turned for the better with call money rates stabilising between 7 to 12 percent.
However, it had increased to 18 to 20 percent ahead of Eid.
This year, it is truly stable even in the festive season – another indication of Bangladesh’s economic stability in the midst of uncertain, fractious politics. – bdnews24.com
