The local inter-bank money market came under pressure Sunday as banks saw a sudden rise in demand for cash over maintaining their mandatory Cash Reserve Requirement (CRR) with the central bank and mobile phone operators' withdrawal of money from the banking system, sources said.

The call money rate went up on the day as most of the commercial banks turned to the inter-bank money market to meet their excess demand for cash, banking sources said.

"Nearly all the commercial banks had to borrow while few banks were able to lend on the day," a senior fund manager of a second generation commercial bank told the FE.

The inter-bank call money rate slightly rose and hit the day's high at 9.25 per cent from 6 to 7 per cent on Thursday, the previous working day.

Experts said mainly two things drove up the call money rate on the day.

Firstly, the banks had been in need of money from the inter-bank market to adjust their CRR with the Bangladesh Bank (BB) after the recent prolonged vacation.

Secondly, some mobile phone operators withdrew a large chunk of money from the banks for depositing it in a government account.

In addition, the government borrowed Tk 10 billion through the weekly auction of treasury bills from the commercial banks on the day.

News: The Financial Express/Bangladesh/03-Sep-12