Commercial banks on Monday went on a borrowing spree from the Bangladesh Bank to meet their liquidity shortages despite a hike in the policy rate.
In an auction, 38 banks and two non-bank financial institutions (NBFIs) took Tk15,120 crore from the central bank through repo and liquidity support facilities.
Around half of the 61 banks in Bangladesh borrowed around Tk15,000 crore from the central bank on Tuesday.
The foreign exchange crisis, high inflation, the growing interest rates of government Treasury bills and policy rate hikes have created a tight liquidity situation in the overall banking sector, said industry insiders.
However, most banks nowadays are taking liquidity support from the central bank and investing in Treasury bills as the latter's yield has reached 11%.
During Monday's auction, three banks took Tk202.70 crore through the one-day repo facility while 20 banks and two NBFIs borrowed Tk7,550 crore through the 7-day repo facility.
Moreover, 12 banks took Tk6,882 crore through the one-day liquidity support facility while three Islamic banks secured Tk485 crore through the 14-day Islamic bank liquidity facility.
The interest rates were 7.75%, 7.85%, 7.75%, and 7% to 8.50%, respectively.
On November 26, the central bank raised the repo rate by 50 basis points to 7.75% to step up its fight against persistent high inflation.
Not only the central bank, but banks are also reaching out to the call money market to borrow funds.
On Tuesday, the average overnight call money rate stood at 8.57%, which was around 6% a few months back.
The rate for 14 days was 9.28%.
