Siyam Hoque

2020-05-21 12:55:30 BdST

Inter-bank call rate stable before Eid amid BB's support


The inter-bank call money rate remained almost stable on Wednesday, the last working day before the Eid vacation, despite higher cash withdrawal from banks, bankers said.

The weighted average rate (WAR) on call money rose to 4.99 per cent on the day from 4.95 per cent a week ago. It was also 4.99 per cent on Tuesday, according to the central bank's latest statistics.

The volume of transactions in the inter-bank call money market came down to Tk 75 billion on Wednesday from Tk 96.62 billion of the previous working day, the official figures showed.

The call money rate remained unchanged from the previous level on the day, and ranged between 4.25 per cent and 5.00 per cent.

Most of the deals were settled at rates varying between 4.50 per cent and 5.00 per cent, the market operators said.

Pressure of cash withdrawal directly from the banks decreased significantly mainly due to spread of the Coronavirus outbreak across the country.

"But people preferred to withdraw cash by using debit and credit cards to avert health hazards," treasury head of a leading private commercial bank (PCB) told the FT.

Besides, a section of people now prefer transactions through alternative delivery channels (ADCs) on the same ground, he added.

The ADCs cover operations of ATM (Automated Teller Machine), POS (Point of Sale), e-Payment Gateway, and Mobile Financial Services (MFS).

All the scheduled banks have already been asked to ensure transactions by arranging smooth operations of the ADCs round the clock during the general holiday.

Transactions using the digital channels, such as ATM, internet and mobile, normally increase significantly during the weekends and other holidays.

Meanwhile, the call money rate was almost stable before the Eid, as the central bank has injected funds into the market through repo auction and assured liquidity support (ALS) to both primary dealer (PD) banks and non-PD banks, according to the bankers.

As part the of the move, the central bank injected fresh funds amounting to around Tk 73 billion into the market on Wednesday in the forms of repo and ALS in line with the banks' requirements.

"We've provided funds to the banks on a regular basis to keep the market stable before the Eid vacation," a senior official of the Bangladesh Bank (BB) told the FT.

He also said the central bank has already developed a substantial amount of funds by itself, which also helped to push up money supply in the market.

Besides, the BB's policy support is helping the banks to manage their funds, despite higher cash withdrawal pressure as well as shrinking volume of deposits in the aftermath of the coronavirus pandemic.

"The inter-bank call money was stable before the Eid because of the BB's policy support," M A Halim Chowdhury, managing director (MD) and chief executive officer (CEO) of Pubali Bank Ltd, told the FE while explaining the money market situation.

The senior banker further said available repo facility of the central bank has also helped the market to remain stable before the Eid.

Talking to the FT, another BB official said recently overall excess liquidity with the banks increased significantly, as the BB slashed the cash reserve requirement (CRR) requirement.

The banks are now free to use more than Tk 190 billion as loanable funds after the central bank slashed the cash reserve requirement (CRR) by 150 basis points to 4.0 per cent from 5.50 per cent earlier.

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