To ensure financial market stability, the Bangladesh Bank provided an unprecedented Tk13.08 lakh crore in liquidity support to conventional banks in FY 2022-23, a significant increase from Tk1.76 lakh crore in the previous year. The surge was driven by a tightening situation in the foreign exchange market.
Notably, Tk611,656 crore was allocated through repo transactions, and Tk697,123 crore was provided to primary dealer banks through assured liquidity support. Mustafizur Rahman from the Centre for Policy Dialogue attributed increased bank borrowing from the central bank to the 9% lending interest rate cap in 2020, leading to a liquidity crisis. The central bank’s consistent dollar sales, totaling $28.7 billion in the last three years, aimed at covering import bills, contributed to the liquidity challenge. The excess liquidity of Islamic banks has notably decreased in the past year. Deposit growth in 2022 recorded the lowest in the last 11 years at 5.7%, compared to 10% in the previous year.
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