Call money rate rises over new CRR rules execution

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FE Report
Call money rate increased Thursday following implementation of the new cash reserve requirement (CRR) rules for the commercial banks, treasury officials said.
The call rate ranged between 3.75 per cent and 6.15 per cent on the day against 3.30-4.50 per cent the previous day. However, most of the deals were settled between 5.50 per cent and 6.00 per cent.
Excess liquidity amounting to over Tk 15 billion will be deposited to the Bangladesh Bank (BB) by the commercial banks by May 16 to maintain the new CRR rules, they added.
The new CRR rules were supposed to come into effect from May 15 but they have been allowed to be implemented on May 16 due to weekend, central bank officials said.
Under the new rules, the commercial banks will have to maintain the 5.5 per cent CRR instead of the previous 5.0 per cent with the central bank from their total demand and time liabilities on a bi-weekly basis.
"We are closely monitoring the situation to keep the market stable," a Bangladesh Bank (BB) senior official told the FE, adding that the central bank will use its instrument like repurchase agreement (repo) if it is needed.
Treasury officials of the commercial banks, however, feared that the demand of liquidity might increase further in the market for carrying out the new CRR rules.
"The money market will remain stable if the central bank plays its due roles," a senior treasury official of a commercial bank told the FE, adding that the inter-bank call rate might shoot up if the BB would not allow the repo to the banks.