The amount of excess liquidity in banks has grown to Tk 51,696 crore in the past year as consumer trust in banks has begun to recover.

The banking sector’s total excess liquid assets at the end of December 2024 were Tk 2,15,000 crore, up from Tk 1,63,000 crore in December 2023, according to the most recent data from Bangladesh Bank.

The cost of excess cash has dropped by Tk 2,291 crore to Tk 17,675 crore, despite the fact that banks’ excess liquid assets have increased. In August 2024, the excess liquid assets of banks following the fall of the Awami League government were Tk 5,871 crore; however, during the following six months, this amount increased.

By the way, banks’ excess liquidity is determined after maintaining the necessary Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

According to banking sector stakeholders, the increase in excess liquidity of banks is having a negative impact on investment in the private sector. In this regard, banks are interested in increasing investment in government securities. As a result, the private sector credit growth rate has slowed to 7.27 percent.

According to the Bangladesh Bank report, private sector credit growth has now fallen to 7.28 percent due to reduced demand for credit and lack of new investment.

A managing director of a state-owned bank mentioned that the import of capital equipment into the country has decreased, due to which banks are investing money in government securities. However, the flow of dollars among banks is good and the import of consumer goods and industrial raw materials is fairly stable.

According to Bangladesh Bank data, the amount of letters of credit opened during July-December 2024 increased to $34.89 billion. Which was $33.49 billion in the same period of the previous year. However, the import of capital equipment decreased by 27.66 percent during the same period.