Home ›› 08 Apr 2022 ›› Front
The surplus fund in the banking sector continues to dip lately owing to growing import payment that has dragged the country’s foreign exchange market into a quagmire.
At the end of February this year, excess liquidity in banks stood at Tk 2,04,600crore, down from Tk 2,11,506 crore in a month ago, as per the latest data from the Bangladesh Bank.
The surplus fund in the banking industry hit an all-time high of Tk 2,31,711 crore at the end of June last year.
The excess fund decreased by 11.68 per cent (Tk 27,076 crore) in just eight months.
Of the total surplus fund in February, Tk 86,600 crore belonged to state-run commercial banks; Tk 91,500 crore to private commercial banks and the rest of Tk 26,500 crore to foreign commercial banks, as per the BB data.
“Now there is a huge pressure on the foreign exchange market due to steep rise in import payment and low inward flow of remittance,” said Dhaka Bank Managing Director and CEO Emranul Huq.
“And the import payment got a faster pace due to fuel price rise in the global market,” he added.
The settlement of Letter of Credit (LC), generally known as actual import, in terms of value, rose by 52.01 per cent to $ 52.60 billion during the July-February period of this fiscal.
The settlement for petroleum import stood at $ 44.68 billion during July to February of the current fiscal, up by 86.02 per cent from the same period a year ago. During July-February period, the import payment for consumer goods rose by 48.68 per cent while that for intermediate goods 51.52 per cent, as per the BB data. On the other hand, inward remittance dropped by 17.76 per cent to $ 15.3 billion during July-March period of the current fiscal year.
The Bangladeshi taka has continued to be depreciated since July last year due mainly to the soaring demand for US dollar.
The interbank exchange rate hit Tk 86.20 per dollar now, which was Tk 84.80 per dollar in July.
Most banks face US dollar shortage to pay import bills, which pushed them to the central bank for USD purchase, said a high official of the central bank.
According to the official, the Bangladesh Bank withdrew around Tk 34,480 crore from the banking sector by injecting over $ 4 billion during August to March of this fiscal which ultimately led to reduce surplus fund in the banking sector.
Not only Bangladesh, the demand for US dollar went high globally due to the Russia-Ukraine war, said the BB official.
A high official at the treasury department of a state-run bank told The Business Post that the bank was once flush with huge surplus fund amidst the pandemic but now it has been facing a shortage of cash.
The surplus liquidity of the bank has decreased due to purchase of US dollar from the central bank.
Mercantile Bank Additional Managing Director Mati Ul Hasan said the excess liquidity will fall further in the coming days as credit demand has improved ahead of Eid ul-Fitr.
The private sector credit growth stood at 10.87 per cent in February which was much better than the pandemic period in 2020 and 2021, he added.
In tune with Mati Ul Hasan, Mutual Trust Bank Managing Director Syed Mahbubur Rahman said the private sector credit growth may rise at the end of March due to the stimulus disbursement.
“Most banks are disbursing loans under the second round of stimulus package, which will help the private sector credit growth get a faster pace,” he told The Business Post.
Current situation of forex reserve
The foreign exchange reserves of Bangladesh are now declining day by day due to the growing import payment and downward trend in remittance earning.
As of April 7 this year, foreign exchange reserves stood at $ 44 billion, down from $ 46 billion on February 28, as per the BB data.
Contacted, Zahid Hussain, former lead economist of the World Bank, Dhaka office, told The Business Post the import payment is rising sharply due to price hikes in the global market.
“Not only Bangladesh, all the import-dependent countries are also facing pressure due to such price spiral. The Russia-Ukraine war also impacted the price of commodities in the global market,” added the noted economist.
Zahid observed that the high import payment and price hike in the global market hit the general people hard.
