The rising trend in interbank call money rate continues as the country's banks on Monday borrowed from each other at an overnight rate of 5.03%, equaling the previous peak recorded on 16 June 2020.
The call money rate was stable at 5.02% in the previous five days, according to the Bangladesh Bank.
The overnight call money rate is the rate at which banks lend funds to each other at the end of the day in the overnight market.
Industry insiders have said if the supply of money does not increase, the cash shortage may exacerbate ahead of Eid-ul-Azha.
Speaking with treasury heads of several private banks, The Business Standard has learned that a lot of money has gone to the Bangladesh Bank from the banking channel because of buying US dollars from the central bank. As a result, banks are left with reduced liquidity.
Besides, there has been a rising tendency among people to take out loans rather than deposit money for the past several months, and one of the reasons for this is that the interest rates that banks are now paying on deposits are lower than the current inflation rate, they maintained.
Also, the government has increased borrowing from the banking channel to meet its budget deficit, they mentioned.
"Overall, we are witnessing a somewhat liquidity crisis in the banking channel," they concluded.