Huge cash withdrawals stretch banks
Huge cash withdrawals from banks ahead of the Eid fuelled the inter-bank call money rate yesterday, treasurers said.
The rate reached as high as 20 percent and most of the deals traded between 18 percent and 20 percent, the treasurers said.
“There was a significant pressure of cash withdrawals,” said a treasury official of Prime Bank.
Eid-ul-Fitr and Eid-ul-Azha are the two peak festive seasons for a rise in demand for money. During the last year's Eid, the call money rate was between 4 percent and 7 percent.
Bankers said long queues were seen at different banks yesterday as Sunday was a public holiday. Many banks stayed on, after banking hours closed at 2.30pm yesterday.
Bangladesh Bank pumped nearly Tk 9,000 crore into the market through repo and special liquidity support to avoid any liquidity crunch. The central bank sells money to banks by a repurchase agreement, commonly known as repo, to help the market remain stable.
According to market players, most local banks, particularly private ones, faced a shortage of liquidity yesterday. Only the foreign banks and a few state-owned banks did not feel the shortage of money, they said.
The operators said borrowing by non-bank financial institutions fuelled demand for money and the price of borrowing as well.
“Government borrowing from the banking industry this month has also contributed to the call money rate influx,” said an official of NCC Bank.
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