The sluggish demand for money has been affecting banks’ business and swelling their unutilised funds, bankers said.

The banking sector had nearly Tk 83,000 crore in excess liquidity at the end of November, according to Bangladesh Bank data, reflecting a slowing demand for money in the market. The amount was Tk 80,000 crore in July.

Disbursement of industrial term-loan at Tk 8,880 crore for the July-September period of 2013 is also the lowest in the last five quarters.

“We have a huge liquidity and have given our branches loan targets for the first time,” said Pradip Kumar Dutta, managing director of Sonali Bank, the country’s largest bank in terms of branch network, deposits and many other indicators.

Nearly half of Sonali Bank’s Tk 64,000 crore deposits remain idle now due to a weak demand.
The top management of the bank has asked their 1,203 branches to find out potential borrowers so that they can use the money to earn some profit.

The bank is now in a desperate move to give loans after building a strong deposit base following scams in 2012, but it is not getting clients, according to Dutta.

Now Sonali Bank’s loan-deposit ratio (LDR) has gone down to only 53 percent, meaning it lends Tk 53 against a deposit of Tk 100.

Lending by private banks also remains subdued though their position is better than that of public banks.
The economy has been suffering from series of shutdowns and blockades since the beginning of the year.

More than 60 days of strikes and blockades have affected manufacturing, services and trade sectors, for which the demand for money has declined substantially.

Frequent blockades for the past two weeks have made the prospect bleaker with a disruption in transport and supply chain.
“There is hardly any demand for money,” said Anis A Khan, managing director of Mutual Trust Bank. “The situation looks very bleak now.”

Mutual Trust Bank’s LDR has nosedived to 71 percent now from more than 75 percent in December last year.  Most of the banks’ LDR has gone down to below 70 percent, which is significantly lower than the BB’s permissible limit of 85 percent.

Even a cut in the lending rate could not boost the demand for credit. “The market is very liquid, but the investment demand is poor,” said Shafiqul Alam, managing director of Jamuna Bank.

However, there is a demand for credit from small and medium enterprises, but the utilisation is low, according to the head of SME at a private commercial bank.

“Many loans are being approved, but the borrowers are not taking the money,” he said.