The inter-bank call money rate on Thursday, the last working day of the week, hit 25 percent as the cash withdrawal took place in larger amounts from various banks ahead of the biggest religious festival Eid-Ul-Fitr.

Although the central bank fixed the rate for the day at 20 percent early on Thursday, the rate went up by 5 percent.

Bangladesh bank sources said that commercial banks on Thursday transacted Tk 55 billion, Tk 130 million more than that of the previous day.

M Jahangir Alam, executive director of the central bank told daily sun that 20 percent call money rate against FDR rate of 12 percent is quite usual before Eid.

He said there is no sign of liquidity constraint in the market as the number of borrower is very less against much more number of depositors.

There is no crisis of foreign currency in the market. As we have released sufficient dollar in the market the local currency Taka has been appreciated against the greenback, he said.

“We believe that the market should be allowed to move on its way rather than imposing anything decision on it,” Jahangir Alam added.

He however said, the central bank is keeping sharp watch on the currency market so that the market cannot turn abnormal.

A few banks including the country’s largest state-owned commercial bank, Sonali Bank and Agrani Bank had to borrow money from the market yesterday to meet growing demand from the depositors.

Sonali Bank borrowed Tk 2.55 billion yesterday.

Managing director in-charge of Sonali Bank Atiqur Rahman told daily sun that borrowing required funds through the call money market is a very common practice in banking culture and before a big festival like Eid, borrowing sometimes becomes an inevitable for some banks.

Virtually the call money rate ranged from 12 percent to 25 percent on Thursday as some of the non-banking financial institutes (NBFI) charged up to 25 percent.

Managing director of Agrani Bank, Syed Abdul Hamid said the call money normally fluctuate within a certain limit but if it crosses the limit even abnormally before festivals like Eid it will not be surprising.

Abdul Hamid however hoped that Thursday’s call money rate could come down below 15 percent at the end of the day but finally the rate increased to some extend at the day’s closing.

Meanwhile, some executives of private commercial bank said making unusual profit by capitalising fund constraints is quite unethical.

Talking to daily sun managing director of Islami Bank Mohammad Abdul Manna said that such greed-based and profit mongering practices by some banks should be stopped.

News: Daily Sun/ Bangladesh/ Aug-26-2011