Dhaka, Bangladesh (BBN) – The overall excess liquidity with commercial banks fell in January last as a potion of bank deposit diverted into savings instruments along with the change in depositors’ behaviour in holding cash due to the political uncertainty.

The excess liquidity dropped by 5.63 per cent to BDT 1.08 trillion as of January 29 last from BDT 1.14 trillion in December last. On November 27 last the excess liquidity stood at BDT 1.10 trillion.

However, both excess liquidity and deposits registered a rising trend in the beginning of this month while the overall credit increased showing a downtrend, according to the BB officials.

They said most of the excess liquidity funds have been invested in government securities as the risk-free investments.

On the other hand, the overall deposits excluding inter-bank fell by 1.08 per cent to over BDT 7.03 trillion during the period under review from BDT 7.10 trillion as of December 31 last, according to the central bank statistics.

“Cash withdrawal trend of households increased recently due to the blockade and shutdowns across the country,” a senior official of the Bangladesh Bank (BB) explained.

He also said higher interest rates on savings instruments were encouraging the small savers to invest more in risk-free securities.

BBN/SSR/AD-27Feb15-12:02 pm (BST)