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The Bangladesh Bank sold Bangladesh Bank bills worth Tk 38,869.5 crore to the scheduled banks in August and September to contain the excess liquidity in the country’s banking channel.
The central bank has adopted the strategy of squeezing money supply after the announcement of its monetary policy for the fiscal year 2021-2022 as it found diversion of money to the non-productive sectors by banks amid a huge surplus in liquidity.
An official of the central bank said that auctions of bills might continue in October.
The excess liquidity in the banking sector was around Tk 2 lakh crore in July while the amount was around Tk 1.4 lakh crore in the same month of the previous year.
In June 2021, the amount of excess liquidity in the banks increased to an all-time high of Tk 2.31 lakh crore.
Of the Tk 38,869.5 crore in the last two months, the central bank pulled Tk 19,224 crore in September out of the banking sector after collecting Tk 19,645.5 crore in the previous month.
In September, banks received interests ranging between 0.94 per cent and 1.75 per cent against the seven-day BB bills worth Tk 5,073 crore auctioned in two days.
The interest rate range was between 1.18 per cent and 2.05 per cent against the 14-day BB bills worth Tk 4,650 crore.
Against the 30-day BB bills worth Tk 9,501 crore, the central bank accepted bids at interest rates ranging between 1.32 per cent and 2.44 per cent.
Once the bills mature, banks get back the money they pay the central bank on the day of auction, a BB official said.
The central bank keeps money only against the immature BB bills, the official said.
Apart from the auctions of BB bills, sales of dollars in the interbank money market by the central bank are also reducing currency circulation on the money market.
BB executive director and spokesperson Md Serajul Islam said that the central bank had sold $786 million from July to September 28 of the fiscal year 2021-2022 through the interbank money market amid the growing import payment-induced demand for the global currency.
As a result of the injection of US dollars into the market, the circulation of local currency on the market declined by around Tk 6,681 crore in the last three months.
(NA)
