9 banks hold over 60pc of excess liquidity in banking sector

Sixty-two per cent of the excess fund in the banking sector in Bangladesh is concentrated in nine banks, highlighting that other banks are facing liquidity shortage pressure.
The nine are Sonali Bank, Standard Chartered, Janata Bank, Islami Bank Bangladesh Ltd, Agrani, Rupali, Pubali, Bank Asia, and Dutch-Bangla Bank Ltd.
Excess liquidity totaled Tk 189,910 crore in July, which was, however, down by 7 per cent a month before and 15 per cent year-on-year, data from the Bangladesh Bank (BB) showed.
Excess liquidity held by banks means that the country's private sector is not getting adequate loans, experts say. This is because the banks that sit on surplus funds usually invest them in bills and bonds issued by the government.
Some of them are now turning to Treasury bills and bonds because of a reasonable yield compared to the interest rate on loans going to private sector.A bank receives up to 8.65 per cent on their investment in government securities whereas they can earn a maximum of 9 per cent on the loans owing to interest rate ceiling, which has been in place since April 2020.
Senior banker said: "It is a common phenomenon that some banks enjoy better liquidity position while others struggle. This is why cash-strapped banks approach the call money market to meet their immediate liquidity requirement."