Bangladesh Bank to mop up excess money from banks

Bangladesh Bank has decided to withdraw excess money from the banks as excess liquidity is creating problems in the financial sector.

The process of withdrawing money from banks through the 'Bangladesh Bank Bill' will start from next Monday. However, how much money will be withdrawn has not been fixed yet by the central bank. Earlier, on 29 March 2018, money was withdrawn from banks in this way.

On 29 July, Bangladesh Bank announced the monetary policy of the current fiscal year. It said the central bank will withdraw the excess liquidity if it creates problem in the financial sector. Bangladesh Bank also said it would not hesitate to adopt the new policy if inflation or price of properties goes up due to excess liquidity.

Besides, the wage earners' income has increased to a great deal. The deposit in the banks has also increased. There is a deposit of about Tk 25,000 billion (250,000 crore) in the banks. Of the amount, Tk 6000 billion is entirely idle. Different bills and bonds have been bought with the remaining money. There are allegations that many banks are misusing the idle money.

It is learnt Bangladesh Bank today sent letters to the banks to join 'Bangladesh Bank Bill'.

It is said Bangladesh Bank decided to float auction of the bill in interest of maintaining stability in the currency market through controlling excess liquidity. Bangladesh Bank will withdraw excess money by selling these bills to the commercial banks. Banks will get profits against this.