Commercial banks' borrowing appetite continues to fall amid a squeeze in credit demand in the face of persisting economic sluggishness in recent months.
Apart from the private sector's lower credit demand, the Bangladesh Bank (BB) keeps injecting liquidity in the form of buying US dollars from the market to keep the exchange rate stable, which further cut commercial lenders' borrowing appetite, according to money market experts.
It ultimately helps banks, which often go for borrowing either from the interbank market or the central bank to meet their requirements, lessen their liquidity appetite and borrowing by overcoming the demand-supply mismatch.
According to the latest Bangladesh Bank data, the monthly volume of call-money transactions, through which banks make short-term borrowing within themselves, dropped to Tk 945 billion in March from Tk 1.47 trillion and Tk 1.06 trillion recorded in September and December last year, respectively.
The central bank repo is another major instrument through which banks can borrow funds from the regulator.
The data shows commercial banks altogether borrowed Tk 1.55 trillion in July last year, but monthly borrowing dropped to Tk 996 billion in September and Tk 1.08 trillion in December.
This further dropped to Tk 986 billion in March 2026.
On the other hand, through the special liquidity facility, under which there are seven borrowing windows like assured liquidity support (ALS), assured repo (AR), and Islamic Banks Liquidity Facility (IBLF), banks overall borrowed Tk 1.43 trillion from the central bank in July last year.
The monthly borrowing volume declined to Tk 603 billion and Tk 383 billion in September last year and March this year, respectively.
Seeking anonymity, a central bank official says the banking regulator kept purchasing US dollars from banks since July 13 last year to stabilise the taka-dollar exchange.
Under such forex-market intervention, the central bank has so far bought $5.68 billion from the market and injected more than Tk 650 billion into banks, he says.
"This intervention plays a major role in commercial banks' plummeting borrowing trend," he says.
In fact, he says, commercial banks now park their surplus liquidity in the central bank's deposit instrument called Standing Liquidity Facility (SDF) significantly despite lower gains at the rate of 7.50 per cent, while the call money rate is around 10 per cent.
According to the central bank data, the monthly volume of fund banks deposited in the SDF increased to Tk 578 billion in March from last December's count of Tk 424 billion.
Managing Director and Chief Executive Officer of Mutual Trust Bank Syed Mahbubur Rahman says the private sector's credit demand keeps plummeting, reaching 6.03 per cent by the end of February 2026.
He says industrial units are facing difficulties in their operation due to various factors like the energy crisis and the recent crisis in the Gulf countries worsened the situation further.
"So, the investment avenues of banks kept shrinking in recent months. That is why their borrowing appetite continues to drop," the experienced banker adds.
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