The interbank call money rate remained stable at 7% to 7.5% for last few months and has not increased even before few days ahead of the Eid-ul-Fitr "“ a festival that usually spreads heat across the money market.
The rate rose slightly to 8% as of yesterday (August 4) thanks to enough supply of money in the market.
It remained at 7.50% for bank-to-bank transactions and 8% for non-bank financial institutions until yesterday as compared to a range between 7% and 7.50% in the last couple of months, Bangladesh Bank data shows.
The call money rate ranged between 20% and 22% before the same festival last year.
Robust remittance inflow, slowdown in investment and sluggish imports have helped create excess liquidity, keeping the bank-to-bank lending rate stable instead of its seasonal upswing, said a senior official of Bangladesh Bank.
He said the banks remained cautious in disbursing loans in the backdrop of the recent credit scams in the banking sector, contributing to create the excess liquidity in the banks.
Bangladesh Bank, meanwhile, is injecting funds into the market almost every day through arranging special repo in response to demands from the commercial banks to keep market more liquid ahead of the festival.
"The demand for money this time is, however, much less than the previous occasions," said an executive.
"We did not face liquidity crisis as of now and would not face it in next couple of days," Association of Bankers Bangladesh (ABB) president Nurul Amin told a views exchange meeting with journalists at Ruposhi Bangla Hotel yesterday. "The liquidity will remain stable in next two to three months."
According to latest figures, Lanka Bangla Finance borrowed money at highest interbank call money rate of 11% on Thursday last and National Bank of Pakistan borrowed at highest rate of 8% on the same day.
The central bank is providing the commercial and primary dealer banks with around Tk1.05bn everyday through special repo and the liquidity support rose to its highest at Tk80.53bn on Thursday last, which was Tk60.94bn on July 24, Tk56.36bn on July 30.
It had provided the market with a liquidity support of around Tk108bn through special repo before the Eid festival last year.
A senior executive said Bangladesh Bank did not face pressure from banks for money ahead of this festival as the banks are not facing liquidity crisis.
The interest rate on special repo and liquidity support facility was between 10.25% and 7.25% per annum.
An official of a private bank said that the banks were now getting relief from the cash crisis they usually face ahead of Eid.
Ahead of Eid, non-resident Bangladeshis sent home $1bn in July (up to 26th) in remittance.