Call money and interbank repo transactions surged in September, reflecting that banks increasingly depended on market-based funding as the central bank scaled back direct liquidity injections.
According to the central bank鈥檚 latest Money Market Dynamics report, call money transactions 鈥� the most immediate borrowing between banks 鈥� rose sharply by 26.6 per cent to Tk聽1,47,007 crore in September from August.
Overnight call money 鈥� loans repayable within a day 鈥� made up 87 per cent of total call transactions, amounting to Tk聽1,28,499 crore.
The weighted average rate slightly eased to 9.97 per cent, suggesting stable short-term borrowing costs despite higher activity.
Interbank repo transactions, where banks borrow from one another using securities as collateral, more than doubled 鈥� up 113.7 per cent to Tk 54,132 crore.
Most of these were seven-day tenures, indicating that banks preferred slightly longer borrowing horizons to manage liquidity pressures.
The weighted average rate dipped by 7 basis points to 9.94 per cent.
Conversely, the central bank鈥檚 repo operations 鈥� the key channel for short-term liquidity support 鈥� 聽reduced by 8.95 per cent to Tk 99,568 crore, reflecting reduced reliance on Bangladesh Bank liquidity support
It was for the first time in several months that central bank鈥檚 repo transactions fell below Tk 1 lakh crore.
Fourteen-day repos accounted for nearly 80 per cent of the total, reflecting the Bangladesh Bank鈥檚 continued use of this tenure as its main liquidity instrument.
The decline followed recent policy changes, including the suspension of the 28-day repo facility in April and the reduction of the Standing Deposit Facility (SDF) rate to 8 per cent, which together reshaped short-term liquidity management.
Standing lending facility (SLF) borrowing 鈥� used when banks face liquidity shortages 鈥� dropped sharply by 97 per cent to Tk 849 crore, while deposits in the standing deposit facility (SDF), where banks park excess funds, jumped by 37 per cent to Tk 36,533 crore.
The divergence shows that some banks are facing cash shortages while others are holding surplus liquidity amid uneven liquidity distribution across the sector.
Special liquidity facilities, such as assured liquidity support for primary dealers, fell 49 per cent to Tk 60,332 crore, indicating that reliance on emergency funding eased after heavy use in previous months.
Meanwhile, government borrowing through treasury bills surged by 14.3 per cent to Tk 36,000 crore in September, pushing yields slightly down across maturities.
Analysts said this decline in cut-off rates indicates improved liquidity conditions despite the drop in central bank repo operations.
Overall, the data suggest a transition toward more market-based liquidity management. However, analysts cautioned that uneven liquidity among banks, combined with rising government borrowing, could strain smaller lenders in the coming months unless private sector credit growth revives and interbank funding remains accessible.
