Home Bank & Finance Over Tk 60,000cr borrowed in 4-day
Bank & Finance - January 6, 2024

Over Tk 60,000cr borrowed in 4-day

Money shortage in banks

Staff Correspondent : At the beginning of the year, the cash crisis in the banks has become evident. To meet this crisis, apart from the central bank, one bank is borrowing from another bank almost every day.
As the crisis increases, so does the debt level. In the first four days of this year, the banks have borrowed more than Tk 60 thousand crore. Among these are one day term loans. Which are repaid the day after borrowing. But to repay that loan, it is borrowing from other sources.

According to sources, credit flow increases more than deposits, excess liquidity in the banking sector decreases, cash buys dollars from the central bank, low loan collection and increase in defaulted loans have led to liquidity crunch in banks.
Banks are being given special liquidity support by repurchasing repo or treasury bills from the central bank to deal with liquidity crisis. Although the liquidity flow in the banking sector has increased slightly, it is not sustainable. After a few days it decreases again.
According to the report of the central bank, banks have borrowed a maximum of Tk 25 thousand crore on Wednesday. Of this, Tk 21 thousand crores have been borrowed from the central bank and one bank has borrowed about Tk 4 thousand crores from other banks through money market and other instruments.
In addition, on the first day of the year, Monday borrowed Tk 14.50 crore. Out of this, Tk 10,500 crores from Central Bank and Tk 4,000 crores from call moneymarket. On Tuesday, it borrowed Tk 13,500 crores from the central bank and Tk 3,000 crores through call money market and other instruments. On Thursday, it borrowed about Tk 5 thousand crore through loans and other instruments.
Sources say banks are flush with cash at the end and beginning of the year. Because, at that time the annual target has to be met. Due to this, deposits are scattered. That’s why banks don’t lend. As a result, the interest rate in the money market is between 1 and 2 percent. But this time is an exception.
There has been a shortage of cash in the banks throughout the year. By the end of the year, it had increased instead of decreasing. Because, at this time, the banks have to adjust the debts of various deficits. The level of borrowing has increased as it has not been possible to adjust those deficits in its own money.
Meanwhile, the central bank has also increased the level of liquidity support to commercial banks. Besides, some additional time has also been given to reconcile the current account deficit of various commercial banks with the Central Bank.
To meet the liquidity crunch, banks have raised their interest rates to collect additional deposits. Some banks have pushed deposit interest rates close to double digits. At the same time increasing the flow of liquidity by buying remittances at higher prices.

Check Also

Govt plans to borrow Tk 2.5 tr for budgetary support in FY 2025

Mahfuja Mukul: Government’s dependence on debt to meet development and operational expendi…