Commercial banks in Bangladesh are showing signs of recovery from a persistent liquidity crisis, aided by significant cash injections from the central bank despite the continuation of a tight monetary policy.
The improvement in liquidity is evident in two key indicators: the volume of excess liquidity in banks and the amount of uninvested cash in their vaults.
Excess liquidity comprises cash and cash-equivalent assets such as treasury bills and bonds, alongside cash reserves excluding liquid assets. Uninvested cash refers to the available credits within the bank vaults.
According to data from the Bangladesh Bank (BB), uninvested excess cash within the banking system stood at Tk 116.30 billion in June 2023. This figure declined to Tk 54.30 billion by November 2023 and further to Tk 51.56 billion in January 2024.
However, a rebound has been observed since then, with uninvested cash rising to Tk 76.43 billion in February 2024 and reaching Tk 84.09 billion in April 2024.
Similarly, the excess liquidity in commercial banks has shown signs of recovery. BB data indicates that excess liquidity was Tk 1.66 trillion in June 2023. This volume dropped to Tk 1.41 trillion in November 2023 and rose slightly to Tk 1.55 trillion in January 2024. By February 2024, it increased to Tk 1.62 trillion and further to Tk 1.76 trillion in April 2024.