The country’s scheduled banks borrowed a record Tk 24,455 crore through repo from the Bangladesh Bank last Wednesday, in a bid to cover their liquidity crisis. On Tuesday, a day before, the central bank injected Tk 16,091 crore into these banks.
A central bank senior officer, on condition of anonymity, told the Business Post that banks are facing a liquidity crisis due to lower volume of deposits. Non-performing loans (NPL) has increased in the banking sector as well.
The regulator had sold around $3.75 billion till September FY24 to scheduled banks, and the figure was $14 billion on FY23. Besides, the government borrowed around Tk 29,000 crore through treasury bills and bonds from the scheduled banks till September this FY.
Commenting on the issue, Bangladesh Bank Chief Economist Habibur Rahman, “The central bank has been selling USD from the reserves since 2022, against money coming from the market.
“The regulator increased the policy rate this month to tighten the money market. I think this policy would not conflict with the monetary policy."
He added, “If the central bank does not lend the money, the crisis will deepen. Moreover, compression cannot be done in all directions at once. That is why Bangladesh Bank continues to lend.”
According to Bangladesh Bank data, 19 banks and two financial institutions took Tk 9,982 crore against the seven-day term repo last Wednesday. Another bank has taken Tk 154 crore against a one-day term repo.
Seven Shariah-based banks borrowed Tk 4,177 crore for 14 days at 6 per cent to 7 per cent interest. Under a “standing lending facility,” a bank took Tk 1,687 crore for one day at 9.25 percent interest.
Besides, Tk 8,455 crore was taken by 13 banks under the term liquidity facility at 7.25 per cent interest.