The overall excess liquidity with the banks increased by nearly 11 per cent or Tk 77.50 billion in this April, after the central bank slashed the cash reserve requirement (CRR), officials said.
The excess liquidity rose to around Tk 805 billion in April from Tk 727 billion a month before, according to the Bangladesh Bank (BB) officials.
It was Tk 712.36 billion in January 2018.
"Some banks, including the public commercial ones, are now holding excess liquidity after the BB revised the CRR rules," a BB senior official told the FE on Wednesday.
He also said the banks were able to use Tk 103 billion additional fund since April 15 after implementation of the revised CRR rules.
Under the revised rules, the banks are now maintaining 5.50 per cent CRR with the BB, instead of the previous 6.50 per cent, from their total demand and time liabilities on a bi-weekly basis.
The major portion of the excess liquidity has already been invested in the government-approved securities and the BB bills as risk-free investments for the banks, the BB official added.
On the other hand, excess reserve, generally known as excess over daily minimum CRR with the BB, also rose to Tk 48 billion in April from Tk 32 billion in March.
The central bank's selling of the US dollar has contributed to help the commercial banks reduce their excess liquidity, another BB official said.
"The excess liquidity with the banks could have been Tk 1.0 trillion, if the banks had not purchased the US dollar from the central bank to settle their import payment obligations," he explained.
Around Tk 190 billion entered into the BB's vault in exchange of US$ 2.31 billion, sold by the BB to the banks from July 01 to June 12, according to the officials.
The BB has resumed giving the support through selling the US currency to the banks directly to keep the foreign exchange market stable in recent months.
Talking to the FE, a senior treasury official of a leading private commercial bank (PCB) said the overall excess liquidity in the banking sector is still in a satisfactory level.
"It helps keeping the money market stable despite higher withdrawal of cash from the banks before the Eid-ul-Fitr festival."
He also said the call money rate moved up slightly in the recent days mainly due to higher withdrawal of money from the banks ahead of the Eid.
The weighted average rate (WAR) on call money rose to 3.59 per cent on Monday from 3.52 per cent on the previous working day, the BB data showed.
The treasury official also said the cash money withdrawal pressure is decreasing gradually, as the use of plastic money is increasing in the country.
"Online shopping has also contributed to lowering such withdrawal pressure from the banks," he noted.
