Call money becomes a tool for making quick bucks by the banks with the lending rate on the interbank market rising fast, crossing over 10 per cent on average.
Thursday's rate marks one of the highest call-money rates in many years, according to bankers.
The rates ranged between 9.8 per cent and 11 per cent on the last transaction day, and an average of 10.01 per cent for the day.
Central bankers attribute the liquidity strain to increased bets by many banks on government treasuries, which offer risk-free and higher returns compared to other lending avenues.
The central bankers, however, have downplayed this rise, noting that the policy rate currently stands at 10 per cent. The central bank, which has been pursing a tightfisted monetary policy to curb the rate of inflation on the economy, has been steadily raising policy rates in its bid to squeeze money supply.
As part of this tightening, the upper limit of the policy-rate corridor-the standing lending -facility rate-was raised by 50 basis points to 11.5 per cent , while the lower limit, the standing deposit-facility rate, increased to 8.5 per cent.
The hikes in the policy rate, in a cascading effect, have also pushed up lending rates in many banks to hover between 15 per cent and 16 per cent, making funds costlier by the day.
This has raised concerns among businesses, as the rising cost of borrowing impacts production and profitability, according to bankers.
The call-money rate, which represents the interest on short-term or overnight loans between banks to meet urgent cash needs, has been on a steady climb since June last year when it was 6.0 per cent .
Liquidity pressures have been exacerbated by inflation, which increased to 10.87 per cent in October, up by nearly 1.0-percentage points from September, remaining persistently high.
Banks typically resort to call -money borrowing to address asset-liability mismatches, meet statutory requirements like the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), and respond to sudden fund demands.
Bankers list multiple factors stressing liquidity, including increased government borrowing from the banking system, central bank's dollar sales to facilitate settling import bills, and rising treasury-bill rates.
Syed Mahbubur Rahman, Managing Director and CEO of Mutual Trust Bank (MTB), told The Financial Express that liquidity in the banking system remained tight.
He attributes this to "a lack of trust in the banking system among depositors", which has contributed to liquidity shortages.
Mr. Rahman suggests that banks should mobilise funds by offering significantly higher deposit rates to attract clients.
Bankers also have said that massive loan irregularities and capital flight which a US agency report puts to over $100 billion in the past 15 years during the recently toppled Awami League regime worsened the liquidity crisis in the banking sector.
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