Experts blame Covid-19 for poor investment
The country’s commercial banks are holding together a total of Tk 250,000 crore in excess liquidity until end of March this year amid a prolonged Covid-19 pandemic, sources at the Bangladesh Bank said.
BB officials said since the pandemic hit Bangladesh last March, trade and commerce halted, battering investment and money circulation in the economy.
Many traders have simply stalled their new investment plans. A major part of ongoing businesses were also shut. Only a few small businesses were able to get through the crisis period, central bank officials said.
BB sources said the flow of remittances from abroad has increased, but the beneficiaries are saving most part of it, allowing little to circulate into the economy.
Due to two consecutive waves, the economic activities have been badly battered and because of insufficient disbursement of loans and investment, the surplus liquidity in the banks mounted, the bankers said.
However, they believe the piled up cash would start lessening during and after the Eid-ul-Fitr, the largest festival of majority Muslims in the country.
Asked, former Managing Director of Pubali Bank limited, Abdul Halim Chowdhury said despite this stagnation, there would be a massive flow of money around the Eid festival.
Agrani Bank Managing Director Mohammad Shams-ul-Islam said banks have enough dollars and liquid cash in their vaults. “As because businesses are opening now, the liquidity would start falling a bit,” he said.
According to the latest data of Bangladesh Bank, the excess liquidity in the banking sector stood at Tk 2 lakh crore at the end of February, up from Tk 2,04,060 crore a month ago. However, excess liquidity increased by 92.42 percent in the last one year. In February of 2020, the excess liquidity in the banking sector amounted to Tk 1,03,934 crore.
Bankers said the demand for loans increased slightly in January and February, but it is now declining because of worsening Covid-19 situation.
Many say a good number of small traders were able to avail some credits in 2020 with low interest rate under a deal declared by the government. That is why the loan disbursement had improved slightly in 2020.
The banks have invested a good part of their idle cash in government Bill-bonds. The rest of the fund is lying idle in the respective banks.
According to Bangladesh Bank, the amount of deposits in the banking sector have risen to Tk 12,07, 201 crore in January. This is a record amount in the banking history of the country.
At the end of June 2020, the deposit was Tk11, 80,999 crore. In other words, in the first seven months of the current fiscal year, the deposit has increased by Tk 1,05 202 crore.
Deposits had increased by Tk 83,349 crore in the same period of the previous fiscal year (2019-20). In the same period of the earlier fiscal year (2018-19), the deposits had increased by Tk 40,835 crore.
A review of Bangladesh Bank’s data shows that Sonali has the highest deposits among the state-owned banks. At the end of last December, the amount of deposits in this bank stood at Tk 1, 25 356 crore. The bank’s deposits have increased by Tk 9,046 crore in a year. Sonalihas been followed by Agrani, Janata and Rupali Bank.
Islami Bank recorded the largest deposits in the private sector bank. At the end of January, the bank’s deposits increased by Tk 1.20 lakh crore, which was Tk 1 lakh crore in June last year. During the same period of 2019-20 FY, the bank had a deposit of Tk 94,061 crore. The amount deposited in Pubali Bank was Tk 43,200 crore, which is the second highest among the private banks. After that, First Security Islami Bank has deposits of Tk 43,157 crore and National Bank has deposits of Tk 42,600 crore.
Meanwhile, in the first seven months of the current fiscal year 2020-21, the banks have disbursed a total of Tk 95,729 crore. As a result, the total debt increased to Tk 14,48, 219 crore in January last year, which was Tk 13,52 490 crore at the end of June last year. During the same period of the previous fiscal year 2019-20, a loan of Tk 96,064 crore was disbursed.
The government has announced a low-interest loan package of over Tk 1 lakh crore to help businesses and entrepreneurs in various sectors cope with the effects of the coronavirus pandemic. The loan disbursement under that package is still going on. About Tk 75,000 crore has already been distributed.
