Like every year, expatriates sent large sums of money to their relatives before Eid
Banks are facing huge rush of clients withdrawing cash ahead of the Eid-ul-Fitr holidays starting from June 4.
Over the last three days, banks in the capital were packed with clients withdrawing money and remittances.
Almost every day last week, at least Tk400 crore was withdrawn from Dutch-Bangla Bank’s ATM booths, said an official of the bank.
Like every year, expatriates sent large sums of money to their relatives before Eid.
According to Bangladesh Bank's latest data, the country received $1.35 billion in remittances in the first 24 days of May.
While visiting different bank branches in the capital on Thursday, it was found that bank officials were facing difficulties in handling the large number of clients waiting in long queues at cash counters for transactions.
Sonali Bank (local office) General Manager Nizamuddin Ahmed Chowdhury said: “Our branches were packed with customers completing transactions ahead of Eid.”
“For the purpose of business and personal needs, clients are withdrawing huge amounts of cash before Eid. Many companies and institutions will pay their employees salary and bonuses,” he added.
Meanwhile, the last working day before Eid will be Monday.
Many people are leaving the capital this weekend after taking leave to celebrate Eid in their hometowns.
So, there was huge pressure from clients at the bank branches on Thursday.
Rubel Hossain, a businessman, standing at a cash counter of Sonali Bank, said: “I have to pay salaries and bonuses to my employees, so I came to the bank to withdraw cash. I have been waiting in the queue for the last two hours, because of the rush at the cash counter”.
On the other hand, a huge demand for call money ahead of Eid is leading to a liquidity crisis at the banks, which have reduced investment funds and increased the tendency to borrow from the call money market.
Most of the banks are facing cash crisis due to slow deposit growth and lackluster loan recovery.
According to Bangladesh Bank data, inter-bank call money rate was 4.54% (weighted average) on May 21, with the rate remaining above 4% in the past few days.
"Just ahead of Eid, there will be pressure on the call money market. But this pressure will not be bigger than before.
“Besides the call money market, the commercial banks are borrowing from Bangladesh Bank through repo," said Syed Mahbubur Rahman, managing director of Dhaka Bank and chairman of Association of Bankers, Bangladesh.
Repo is a short-term fund that the central bank gives to commercial banks in case of cash shortfalls at the current rate of 6%, while reverse repo is excess money that banks keep with the central bank.