Dhaka, Bangladesh (BBN)- The inter-bank call money rate fell further to minimum 2.25 per cent on Thursday following suspension of reverse REPO (repurchase agreement) acceptance by the central bank, bankers said.
The call rate ranged between 2.25 per cent and 4.50 per cent on the day unchanged from the previous level. But most of the deals were made at rates between 3.0 per cent and 4.0 per cent, according to the market operators.
However, the overall turnover in the call money market rose to BDT 65.30 billion on the day from BDT 63.10 billion in previous working day, according to the central bank statistics, release on Wednesday.
The central bank has suspended acceptance of reverse REPO since November 16 to force the banks and non-banking financial institutions (NBFIs) to take effective measures to invest their excess liquidity, particularly in different productive sectors.
“We’re trying to give a message to the banks and NBFIs through suspension of the reverse REPO auction to boost their investment in productive sectors by slashing interest rates on lending,” a senior official of the Bangladesh Bank (BB) explained.
He also said the banks should take necessary measures to invest their excess liquidity in the productive sectors immediately.
Lower demand for fresh credit as well as option of foreign currency loans by local companies have contributed to this downtrend of call money rates, according to treasury officials of different commercial banks.
Most of the corporate entities prefer foreign currency loans than local ones mainly due to lower interest rates, they explained.
Meanwhile, the overall excess liquidity with the commercial banks stood at around BDT 1.15 trillion as of October 15. But major portion of the funds has been invested in the risk-free government securities, another BB official said.
He also said the excess reserve, generally known as excess over daily minimum cash reserve requirement (CRR) with the central bank, stood at around BDT 34 billion.
BBN/SSR/AD