A severe liquidity crisis forced the commercial banks to increase borrowing of costly money from Bangladesh Bank in last few weeks.
The central bank has been injecting around Tk 15,500 crore to Tk 16,200 crore into the banks every working day for last few weeks through Special Repurchase Agreement and liquidity support facility to meet the liquidity crisis faced by the banks.
A Bangladesh Bank official told New Age on Tuesday that the central bank had stopped the issuing of Repurchase Agreement on December 22, 2011 to squeeze money supply in the market in line with its contractionary monetary policy.
On the contrary, money supply through Special Repo increased by three folds since December 2011 due to severe liquidity crisis among the commercial banks, he said.
Although the rate of interest for special Repo is 10.75 per cent against 7.75 per cent interest rate for Repo, banks were forced to take a huge amount of money through special Repo because of high government borrowings from banks that created liquidity crisis.
The rate for liquidity support is 7.75 per cent.
According to BB data, the commercial banks, including primary dealer banks, took loans of Tk 16,026.01 crore on June 19, 2012 through Special Repo and Liquidity Support Facility from the central bank.
Banks and non-bank financial institutions received around Tk 5,000 crore daily in December through special Repo and Liquidity Support Facility from the central bank and the figure rose to Tk 8,500 crore in February, Tk 10,500 crore in March and Tk 14,500 crore in May.
Fifteen primary dealer banks and non-bank financial institutions, which have to take government treasury bonds with lower interest rate, are facilitated with Liquidity Support Facility by BB with an interest rate of 7.75 per cent.
The investment of fifteen primary dealer banks and non-bank financial institutions in the form of treasury bills and bonds increased by 22.83 per cent, or to Tk 4,192.02 crore, in the first four months of the current year.
As a result, the investment reached to Tk 22,550.76 crore in bonds and bills till April 2012, creating a severe liquidity crisis in the banks.
According to the latest BB data, the government’s bank borrowings stood at Tk 19,480.46 crore on June 12, up from Tk 18,006.23 crore on June 11.
Of the amount, the government borrowed Tk 4,466.83 crore from the central bank and the remaining Tk 15,013.63 crore from the commercial banks from July 1 to June 12 in the current FY2011-12.
Under the circumstances, majority of the short-term loans through Special Repo and liquidity support facility from the central bank were being taken by the PD banks and NBFIs, said anther BB official.
The state-owned PD banks — Sonali, Agrani and Janata—are taking loan of Tk 1,500 crore to Tk 2,000 crore every day through Special Repo and Liquidity Support Facility, he said.
The Jamuna Bank, Mercantile Bank and AB Bank, which are also PD banks, are borrowing a significant amount of money every working day from the central bank, he said. 
As a result, he said, the inter-bank call money rate has remained high at 15 to 17 per cent now.
‘Although there are widespread allegations about commercial banks’ higher lending rate, BB itself has made the money costly by stopping Repo auction and going for special Repo,’ said an official of a private commercial bank.
For this reason, the high rate of interest against the Special Repo is creating an extra pressure for increasing the overall cost of finance, he said.