BB facilitates Tk20,000cr to banks

The Bangladesh Bank (BB) facilitated Tk 20,163.00 crore to 19 commercial banks on April 18 this year due to the ongoing liquidity crisis in the banking sector, according to the latest data.

The facilities were given under the Repurchase Agreement (REPO), Islamic Banks Liquidity Facility (IBLF) and assured liquidity support facility (ALSF).

After March, it was the highest amount that banks borrowed from the central bank. BB facilitated Tk 28,867 crore to the commercial banks on March 27.

Insiders think that the banking sector is suffering from a liquidity crisis as the government borrowed money from the banks. Currently, banks are investing their excess liquidity in the Treasury Bills and Treasury Bonds as they are getting profits.

Talking to The Business Post, Policy Research Institute of Bangladesh Executive Director Ahsan H Mansur said, “Bangladesh Bank had stopped injecting high-powered money into the economy due to the economists' criticisms. Currently, the government is borrowing from the private banks instead of the central bank against the Treasury Bills and Bonds.

“Banks are also investing their liquidity in these bills and bonds because of the surety of their money. As a result, these banks are facing the liquidity crunch and coming to the central bank to borrow the liquidity.”

He added that the borrowing from BB will increase in future and so, it's printing money as well. The central bank has targeted to keep the inflation rate down to 7 per cent by June this year. However, printing money will boost inflation, which is not expected.

Mansur pointed out that the private sector will be impacted directly as they are not getting the money from the banks. “As a result, it will impact the whole economy.”

Requesting anonymity, the managing director of a private bank said, “We have been facing the liquidity crisis since 2023. On the other hand, the government is borrowing from the private banks. It's directly impacted in the private sector.”