Inter-bank call money rate shot up to 62.5 per cent yesterday, which is highest during the present government’s regime, as banks and financial institutions were facing fund shortage.

The call money rate moved up to 50 per cent on Monday.

“The increase in CRR and SLR of commercial banks and a large amount of share selling pressure put extra pressure on money market.” said Managing director of the Eastern Bank Ali Reza Iftekhar on Tuesday.

He also said the major telecom companies’ have withdrawn cash from the commercial banks ahead of the year ending for making their dividend payments and fees to government exchequer.

A fund manager of a commercial bank said that most of the commercial banks were borrowing from call money market ranging from 35-60 per cent while NBFIs borrowed at rates ranging from 40 to 62.5 per cent.

In a bid to tame inflation by squeezing liquidity in money market, the Bangladesh Bank has increased statutory liquidity ratio (SLR) to 19 percent from 18 percent and cash reserve requirement (CRR) to 6 percent from 5 percent.

The banks and NBFIs should increase their SLR and CRR from today (Wednesday) as per a recent directive of the BB.

Bankers said call money rate usually goes up to 20 per cent before the Eid-ul-Azha because of heavy withdrawal of funds by the hide traders. Call money rate increased up to 85-90 per cent in 2005 during the BNP-led four party alliance regimes.

Although the BB injected Tk 11.4 billion into the money market under a special repurchase agreement (Repo) on Tuesday, the fund proved to be inadequate, fund managers said. The total amount of Tk 34.8 billion was transacted in the local call money market on Tuesday.

Source: daily-sun, Bangladesh/15th Dec 2010