The inter-bank call money rate jumped to 25 per cent on Thursday as clients went for mass withdrawal of cash ahead of the Eid-ul-Fitr.
Bangladesh Bank officials said the call money rate or the interest rate a bank or a non-bank financial institute charged on the money lent for a short period to other banks and NBFIs ranged between 12 and 25 per cent on Thursday, with most of the deals falling in the range of 15 to 20 per cent.
Although the BB in December 2010 asked the banks not to charge more than 12 per cent interest on cash transacted between the banks and the NBFIs, many of them have been flouting the order.
'The volume of bulk withdrawal of funds by clients for Eid shopping has been increasing in the past few days before reaching its peak today as the banks have just two more working days – August 28 and August 29 – before the Eid vacation,' said an official of a commercial bank.
Officials of a number of private banks said, as many of the banks were facing a cash crunch, they were taking short-term loans from the banks that had excess liquidity.
'The liquidity situation of many of the banks is not good as their credit-deposit ratio is high. So, they are now facing difficulties in handing out cash to their clients ahead of the Eid,' said an official of a private bank, adding that the rate might increase further in the last two working days.
The call money rate ranged between 12 and 18 per cent on Wednesday, increasing from the range of 12 to 15 per cent of the previous day.
The commercial banks of the country transacted around Tk 5,500 crore on Thursday.
BB officials said, although the call money rate hike was normal before the Eid, they would take action against the banks that were charging high rates.
The BB put the limit on the interest rate charged on inter-bank money lending when it had reached an all-time high of 190 per cent on December 19, 2010.
The call money rate had posted its earlier record high in 2006, shooting up to 150 per cent.
Source : New Age
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