Banks in liquidity crisis despite fall in loan disbursement

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Golam Mowla
Published : 07:30, Apr 10, 2019 | Updated : 17:14, Apr 10, 2019

This undated file photo shows a official serves a client at a bank.The rate of loans given to the private sector has fallen; last February, loan growth was 12.54 percent, which is the lowest in recent years. On the other hand, banks are facing liquidity crisis and the tendency to borrow from the capital market has increased.
As per the information of central bank, in the last one month, liquidity has fallen by Tk 60 billion. Consequently, interest rate is going up.
It’s found that many banks are failing to collect capital like before while many banks are having to buy Dollar to import items for Ramadan.
Executive director of Policy Research Institute, Dr Ahsan H Monsur, said: “there is liquidity crisis in banking which is hampering the achievement of targets.”
Despite political stability in the country for the last few years, the investment scenario is precarious. Bangladesh Bank’s fixed 16.50 percent loan target has come down to below 13 percent.
As per Bangladesh Bank information, the loan till last February was Tk 8.62 trillion which is Tk 1.08 trillion more than the same period last year.
In 2017, disbursed loan to SME by banks and non-bank financial institutes was Tk 2.02 trillion. In 2018, this came down to Tk 1.08 trillion.
Dhaka Bank’s chairman, Syed Mahbubur Rahman, says: “There was liquidity crisis all throughout 2018 and many banks could not disburse loans as per demand.”
At the end of February of the running year, the total investment in banking sector was Tk 10.15 trillion. At this time, banks disbursed Tk 10.87 trillon as loan.

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