Dhaka, Bangladesh (BBN)- Excess liquidity in the country's banking sector increased by 25 per cent in June as injection of fresh fund by the government as part of speeding up the implementation of the budget at the end of the previous fiscal.
The overall excess liquidity with the commercial banks rose to BDT 456.76 billion in June this calendar year from BDT 363.73 billion May last, according to the central bank statistics.
"The amount of excess liquidity increased significantly in June 2012 because of injection of fresh fund by the government for implementation of projects under the annual development program (ADP)," a senior official of the Bangladesh Bank (BB) said, adding that the rising trend of excess liquidity has continued until July this fiscal.
The excess liquidity of the state-owned commercial banks (SCBs) stood at BDT 160.31 billion as on June 30, 2012, while that of the private commercial banks was at BDT 242.04 billion. The foreign commercial banks had excess liquidity to the tune of BDT 43.28 billion at the close of fiscal 2011-12.
"Fresh credit supplies by bank have slowed down recently because of the declining trend of import orders," a senior official of a commercial bank.
The banker also said some banks are keeping their liquidity as a precautionary measure to meet any exigency, ahead of the Eid-ul-Fitr festival.
"We are always asking the banks to invest their excess funds in a diversified way to help augment new investments," the BB official, adding: "The overall level of excess liquidity will come down further if the bankers can efficiently manage their funds.”
The surplus liquidity becomes a burden for the banks if they fail to manage their funds properly, he noted.
BBN/SSR/AD-02Aug12-6:01 am (BST)
