International Monetary Fund recommended Bangladesh Bank to introduce daily forecast on cash flow in the money market to address the liquidity issue "“ surplus or shortage "“ in the country's banking system.
An IMF technical mission following their visit to Dhaka last month made the suggestion to strengthen the government's cash flow management as they forwarded a statement to the finance ministry last week.
The banks are now holding a huge amount of idle money as their excess liquidity rose 57% to a record about Tk717bn as on May 30 this year from the level it was on June 30 last year.
The accumulation of the surplus fund in the money market is due to weak demand from investors as indicated by figures from the central bank.
The IMF mission suggested the liquidity cash forecasts should be on a daily basis and for the period of four days. The monetary policy department of Bangladesh Bank conducts regular short term cash flow forecasting supporting its open market operation.
"We would appreciate the government cash flow forecast from the finance division on a daily basis for the more accurate liquidity forecasting in the banking sector," Bangladesh Bank said in its remarks to the Finance Division, which presently forecasts monthly cash flow instead of daily.
It would be greatly helpful for the proper liquidity as well as monetary management of the country, it said. IMF also suggested the finance division to share the government cash flow forecasts routinely with the central bank.
Meanwhile, the cash reserves with all banks increased, especially at the private and foreign commercial banks, according to latest statistics from the central bank.
In the last 11 months to June, the private commercial banks held excess cash of Tk438bn and it is Tk79bn in case of foreign commercial banks. The liquidity shot up by 19% to about Tk192 at the state-owned banks.
Bankers blamed the current political unrest for the weak demand for cash from investors.