A severe shortage of cash has emerged in the banking sector ahead of Eid-ul-Azha, with commercial banks receiving far less money from Bangladesh Bank than required amid rising withdrawal pressure during the festive season.
Bankers and central bank officials said some banks have been receiving only 30 to 40 percent of their cash demand for more than a week, creating significant pressure on liquidity management. The shortage has pushed the interbank call money rate above 11 percent.
Although Bangladesh Bank denied any liquidity crisis, officials said the situation stemmed mainly from a shortage of newly printed currency notes. The central bank has also been encouraging electronic transactions instead of cash use.
Demand for cash typically rises sharply before Eid-ul-Azha due to increased spending at cattle markets, salary and bonus payments to workers, and higher household expenses. This year, bankers said the pressure has intensified further.
The managing director of a private bank said cash withdrawals surged ahead of Eid, particularly because of large transactions linked to cattle markets. Many institutions were also withdrawing substantial amounts to pay salaries and bonuses.
According to Bangladesh Bank officials, the central bank had requested Tk 16,000 crore in new notes from the mint ahead of Eid. However, due to shortages of paper and ink, only around Tk 8,000 crore could be supplied. Of that amount, Tk 4,000 crore in new notes has already been delivered to Bangladesh Bank.
Central bank sources said damaged notes are currently being withdrawn from circulation while efforts are underway to supply more large-denomination notes, which see higher demand during Eid-ul-Azha.
At the same time, around Tk 15,800 crore worth of old-design notes featuring Sheikh Mujibur Rahman remain stored at the Security Printing Corporation, though Bangladesh Bank has so far been reluctant to release them into the market.
Officials said the total currency circulation in the country currently stands at around Tk 24 lakh crore, while demand for printed money exceeds Tk 3.2 lakh crore. The suspension of old-design notes has widened the gap between supply and demand.
Bangladesh Bank spokesperson and Executive Director Arif Hossain Khan said banks’ cash requirements were being met gradually through phased distribution of newly printed notes.
“The additional demand will be met in phases even if supply remains limited for now,” he said.
The growing demand for cash has also intensified pressure on the interbank money market. The call money rate crossed 11 percent on Tuesday, with rates ranging between 9.55 percent and 11.50 percent, according to market sources.
Most transactions were settled between 10.06 percent and 11 percent. Interbank call money transactions stood at Tk 3,884 crore on the day, compared with Tk 4,733 crore on the previous working day.
Arif Hossain Khan said Bangladesh Bank was closely monitoring the situation to maintain market stability before Eid. He added that liquidity support through repo facilities and the injection of funds into the market against dollar purchases could help ease pressure on interest rates.
On Tuesday, Bangladesh Bank purchased another $85 million from the interbank spot market through auction to stabilize the exchange rate of the taka against the US dollar.
A treasury official at a private bank said the money market faced additional pressure due to increased Eid-related cash withdrawals and the payment of around Tk 9,000 crore against treasury bills. However, the official said the call money rate could fall below 11 percent again if the situation improves.
Bd-pratidin English/ Jisan
