Country’s call-money market is witnessing accelerated transactions as both the lending and borrowing increased throughout the last one week thanks to the changed and improved political climate following the January 5 national election.
As the demand for cash rises, the weighted average rate of interest on the overnight borrowing from the money market increased to 7.21 percent Sunday from 7.15 percent a week ago.
Bangladesh Bank data show that a total of Tk 6623.50 crore was transacted at the call money market on January 13 while the aggregated transactions started rising since the market opened on January 15 after a public holiday, reports the Daily Sun.
The central bank registered transactions of Tk 7076.50 crore on January 15, Tk 7391.50 crore on January 16 and Tk 7766 crore on January 19, showing an upward trend.
The highest rate of interest on borrowing also rose to 8.10 percent on January 19 from 8 percent on January 13. The rate went up to 6.25 percent on January 19 from 5.50 percent on January 13, averaging the rate at 7.21 percent.
Call money market “I see nothing wrong with accelerated transactions at the call money market. It is because of changed political climate. It is positive for the financial sector if the country returns to full political stability,” said a BB official.
The country has passed through a volatile political situation last year that resulted in slow growth in exports, minus growth in imports, no fresh investment and halt in entire trade and commerce activity.
The political impasse started easing after the January 5 polls as the main opposition BNP has no immediate plan to go for strong action programmes. Rather, the BNP is planning to participate in the upcoming Upazila election.
Meanwhile, state-owned Rupali bank stands top in the lending race while some foreign banks lent hefty sum at the call money market. On January 19, Rupali Bank alone lent Tk 1735 crore while five foreign commercial banks (FCBs) together lent Tk 804 crore.
According to BB data, Tk 345 crore was sent by HSBC, Tk 242 crore by Citibank N.A., Tk 186 crore by State Bank of India, Tk 32 crore by Commerce Bank of Ceylon and Tk 19 crore by Habib Bank Ltd.
Twenty-four banks borrowed Tk 5161 crore from the call money market Sunday. The banks included NCC Bank, AB Bank, Brac Bank, Bank Asia, Eastern Bank, Jamuna Bank, MTBL, Southeast Bank, Standard Bank, The City Bank Ltd, One Bank, Mercantile Bank and newly launched Modhumoti Bank Ltd.