11:35 PM
The banking sector of Bangladesh had idle money when the year 2015 ended.
Bankers say the sector currently has a surplus liquidity amounting to over Tk 1,000 billion.
In calculating the sum, the banks take into account their statutory liquidity ratio (CLR) and investments above that made in treasury bills and bonds.
The Bangladesh Bank, however, estimates the sector’s liquidity surplus to be anywhere between TK 30 and Tk 50 billion.
The central bank considers the cash-reserve ratio (CRR) or money kept with it by commercial banks as a measure of liquidity surplus.
According to the banks, the idle money is the reason of low demand for loans.
The assumption can be confirmed by looking at Bangladesh Bank’s repo and reserve repo movements and the inter-bank call money rate.
The repo and call money rates are indicative of the demand of loan from banks. When a bank runs short of funds to meet loan demands, it borrows from other banks by way of call money or from the central bank by paying a fixed repo rate.
The inter-bank call money rate had dropped to a decade-low of 2% due to sluggish loan demand in 2015.
Besides, Bangladesh Bank loans to the country’s commercial banks have remained suspended for the past six months.
Bankers say treasury bills and bonds are last-resort investments in the absence of adequate loan demands.
Political turmoils, inadequate power and gas supplies to industries, fall in international commodity prices, and the availability of foreign loans are the likely reasons why people did not take loan from the banks.
According to Bangladesh Bank figures, deposits in the banking sector stood at Tk 7,258.6 billion at the end of October. The amount of disbursed loan was Tk 706.2 billion. At the end of September, foreign loans in the private sector had stood at $ 6 billion.
The central bank is, therefore, reluctant to concede a lack of market demand for loans. It maintains that the commercial banks are cautious about giving loans except to reliable borrowers.
The central banks stopped taking reverse repo towards the end of the year to exert pressure on the commercial banks to make investments.
Ittefaq
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