Business

Advertisement

 

Transactions of call money rise ahead of Eid

Staff Correspondent | Published: 23:21, Jul 27,2020

 
 

Demand for call money has increased slightly ahead of Eid-ul-Azha, the second largest religious festivals of the Muslims, as banks and non-bank financial institutions are facing increased cash withdrawal, said Bangladesh Bank officials.

Banks and NBFIs on Sunday transected Tk 9,519.33 crore among them at the call money market, up by Tk 187.46 crore than the total transactions on Thursday.

The volume of transactions was rising steadily from the beginning of the past week with the total transactions shooting up to Tk 9,023 crore on July 20 (Monday) from Tk 8,246 crore on July 19. 

Bankers said that the volume of transactions at the call money market, a short-term money market that allows the banks to borrow and lend money, would remain a bit high before the Eid as people would withdraw money for purchasing sacrificial animals.

To meet the immediate demand for cash, banks which face cash shortage rush to the call money market to borrow fund for a day from the banks which hold excess liquidity.

The central bank has been unofficially intervening in setting the interest rate at the call money market for the last few years.

At present, the highest interest rate of call money has been set at 5.50 per cent.

The weighted average call money rate fell below 4 per cent for several days in the second week of July due to fall in demand after remaining above 4 per cent since December 15 last year.

With the Eid appearing closer, the weighted average call money rate increased above 4 per cent in the third week of July.

On August 4 last year, banks and NBFIs transected Tk 8,891 crore at call money market before Eid-ul Azha.

The highest interest rate of call money was 5 per cent during that time.

Before the central bank’s intervention, the interest rate of call money had high fluctuations.

In 2010, interest rate of call money increased to around 200 per cent before Eid-ul Azha.

In 2012, the highest interest rate was 15 per cent and in 2014 the rate was 9 per cent.

Want stories like this in your inbox?

Sign up to exclusive daily email

Advertisement

 

Advertisement

images