Injection of newly printed money by Bangladesh Bank into the market surged over 175% in FY23, said central bank sources.
Officials at the Bangladesh Bank said the central bank had distributed a record volume of the print money into government accounts in the last one year through buying the majority of the government securities itself with a devolvement mechanism to ease banks' liquidity stress.
According to statistics available with the central bank, the net volume of devolvement carried out by Bangladesh Bank stood at around Tk80,000 crore in FY23, in a quantum leap by Tk51,000 crore from the previous fiscal year's Tk29,000 crore.
The government normally borrows money from the banking system to meet budget-financing shortfalls through auctioning government securities -- treasury bills and treasury bonds hosted by the central bank.
A Bangladesh Bank official said that they sold $13.58 billion in FY23 to banks to help them in overseas transactions amid forex scarcity.
It means the banks spent over Tk130,000 crore to buy the greenback, and it builds up pressure on their liquidity.
Another Bangladesh Bank official, seeking anonymity, said the investors or PDs asked for higher yields amidst the central bank's move in relaxing interest rates.
"If we allowed higher rates for the security instruments in the auction, it would have a negative impact on the benchmark reference rate through which the banks' lending rates will be fixed," the source said.