The banking sector in Bangladesh is facing a severe liquidity crisis, prompting heightened borrowing from the central bank. On May 23, alone, 49 banks and three non-banking financial institutions borrowed approximately Tk 26,365 crore, marking the second-highest borrowing record. Factors contributing to this crisis include slow deposits, a lack of confidence in certain banks, record defaults, and slow recovery. The recent increase in the policy interest rate by Bangladesh Bank, along with news of potential bank mergers, has exacerbated the situation. Additionally, rising interest rates on government treasury bills and bonds have prompted customers to withdraw funds from banks, further straining liquidity. This liquidity crunch is also impacting inter-bank loans, with some banks unable to borrow due to uncertainty over repayment.
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