Excess liquidity in Bangladesh’s banking sector surged by Tk10,000 crore in April, a 5.89% increase from March, reaching Tk176,662 crore. This rise occurred despite the sector’s lowest deposit growth in ten months. The spike was fueled by the government’s repayment of long-standing dues to banks in bonds, which were then reinvested in treasury bills and bonds. Banks, mandated to maintain liquidity under statutory ratios, exceeded these requirements due to heightened investments in government securities. Since 2022, banks have faced liquidity strains from massive central bank purchases and customer withdrawals amid inflation. Despite stringent liquidity regulations, total excess liquid assets amounted to Tk176,662 crore in April, reflecting banks’ cautious investment in securities over lending due to higher returns and asset liquidity.
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