BB draws Tk 19,645cr through auction

In a bid to reduce excess liquidity from banking sector, the Bangladesh Bank (BB) has pulled out Tk 19,645.5 crore through Bangladesh Bank bill auction.

BB Executive Director and Spokesperson Md Serajul Islam confirmed The Business Post on Tuesday.

According to BB data there is excess liquidity of Tk2,31,462 crore in the country’s banking sector as of  June.

Of the total amount, the central bank pulled out Tk 19,645.5 crore through six auctions from August 9 till August 31, for 7-day, 14-day and 30-day bills.

According to the central bank, on the first day of the auction on August 9, Bangladesh Bank sold bills worth Tk 2,605 crore for a period of 7 and 14 days. Of this, the interest on 8-day bills of Tk 1,505 crore was 0. 54 per cent and on 14-day bills of Tk 1,100 crore was 0.75 per cent.

The 30-day Bangladesh Bank Bill was auctioned on August 11. The central bank sold bills worth Tk 6,060 crore at an annual interest ranging from 0.50 per cent to 1.25 per cent.

On August23, the central bank sold bills worth Tk 4,000 crore at an annual interest rate starting from 1 per cent to a maximum of 1.35 per cent.

On August 25, BB sold 7-day bills for Tk 1,300 crore. The interest rate ranged from 0.74 per cent to 1 per cent. The central bank accepted 20 bids for 14-day bill worth Tk 2,007 crore.

The interest rate was kept between 0. 71 per cent and 1.25 per cent.

Finally, the central bank withdrew Tk 363.5 crore from the market in the 30-day term bill auction on Tuesday, August 31. The interest rate was 1.49 per cent.

“As the interest rate was not as expected by the banks, they did not participate in the auction,” Association of Bankers, Bangladesh former chairman Syed Mahbubur Rahman told The Business Post.

“As the banks did not participate, the BB should increase Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) to decrease the excess liquidity,” said former central bank governor Salehuddin Ahmed.

In addition, BB can direct banks to reduce excess liquidity through circulars considering market situation, he added.