Asked by
AL MaMun (4 Golds)
Friday, 06 Dec 2019, 08:04 AM
at (Technology
Internet)
|
|
|
|
|
To understand the liquidity crisis and the call money rate in the banking sector, we need to understand the type of business of the bank. The commercial bank compulsorily deposits 18.50 per cent of its deposits from its depositors in cash and through various means to the central bank, while the remaining 81.50 per cent is invested in the business by the bank. In the recent past, the interest rate of savings in Bangladesh has been high, but the common people have been buying large quantities of stock, rather than depositing their deposited money in the bank, and this sector has been the highest investment in the last three years. Beyond that, the amount of deferred loans has steadily increased, with banks cashing in on regulatory deposits and buying dollars against offshore unit loans. As a result, the amount of liquid / cash money invested by the bank has decreased. This is the liquidity crisis in the banking sector. In such cases, ordinary depositors have no cause for concern, but large borrowers may find it difficult to obtain the required loan assistance from the bank. To meet the liquidity crisis, banks try to increase their deposits by raising interest rates on deposits as a primary shelter. However, banks are borrowing money from partner banks for short-term, usually one-to-one-week periods, to make emergency payments. This inter bank loan is called a collateral. Call money rates generally average between 3.5% and 4.5%. In the case of banks, the relationship between liquidity crisis and call money rate is that the liquidity crisis increases or the call money rate increases. Eid, worship or other big festivals are often seen as one. Answered by AL MaMun (4 Golds) Friday, 06 Dec 2019, 08:05 AM |