The volume of out-of-bank currency, also known as mattress money, amounted to Tk270,000 crore as of last May, and bankers say they still feel the pressure of withdrawal in their vaults.
Sources said cash withdrawal from the banking system was on the rise in recent days as people in large numbers were seen cashing out their deposits both from counters and ATMs.
Officials and bankers admit the currency switch, saying that the upward trend in withdrawing money from the banking system is because people did not get the transaction facility in any form for several days due mainly to the recent nationwide internet outage amid shutdown.
According to available central bank sources, the volume of out-of-bank currency kept declining gradually from June 2023 through the first four months of FY24 in a much-needed respite to the commercial lenders at a time when liquidity situation continued tightening.
But, since the month of November last year, it has gone into a reverse course with the volume of currency outside bank vaults having increased by around Tk2,500 crore to Tk248,000 crore from October's count of Tk245,000 crore, according to the latest central bank data.
The upward trend went past December, January, February, March, April and May with the figures reading Tk255,000 crore, Tk257,000 crore and Tk258,000 crore, Tk261,000 crore, Tk264,000 crore and Tk270,000 crore respectively.
As the demand for cash continues rising, bank borrowing through interbank sources keeps climbing at higher rates.
Riding the higher money demand, the call-money rate rose to 9.12% on May 30, 2024 from 8.72% a month ago.
Officials and money-market analysts cited factors like growing yield on government securities, inflationary burden and the advent of the season of festivals, weddings in particular, and pre-Eid seasons behind the surge in mattress money.
As the yield on government securities kept rising after the central bank tightened money supply to contain inflation, many institutional and individual depositors in the banking industry started diverting their funds into the risk-free investment instruments.