Traders and entrepreneurs are struggling due to high interest rates in bank credit. The negative impact of this is also in the capital market. Investments in the capital market are rising due to rising interest rates on savings deposits. The capital market has become unstable for continued selling of capital.
And the market capitalization is decreasing every day because of the investment going out. The concerned people say, one of the other reasons for the recent unrest in the capital market is the high interest rates of the bank. Banks are collecting deposits at a high rate due to the liquidity crunch, adjustment of default defaults, and the adjustment of debt deposit ratio (ADR).
The savings were also returned to the bank’s savings, leaving the capital market due to high interest rates. Many people buy savings certificates According to sources, the government took initiative to increase the flow of loans at the interest rate of the entrepreneurs and traders to increase the country’s investment. Bank owners have taken advantage of the promise of bringing down the interest rate below 10 percent .
In this, 50 percent of the government’s deposits will be kept in the private bank, the reduction of the cash deposited by the commercial bank or the CRR and the reduction of the interest rate from the central bank to the short-term rate. But the banks could not keep that promise. Although one or two banks started implementing interest rates in a single digit, a large part could not do this. There is a liquidity crisis in the bank due to tightening of debt default, due to lack of deposit and ADR due to preservation, provisional deposits.
For this, the collection of deposits at 6 percent and the loan disbursement of 9 percent is not effective.Capital market sources said that there is a lot of investment in the stock market as a substitute for bank savings. Especially if the interest rate is low in the bank, the flow of money increases in the capital market. Many investors have withdrawn the savings of the bank and bought shares of the listed banks in the capital market.
Because at the end of the year, at least 10 percent of the listed banks in the capital market and again, a bank gives 20 percent or more dividends. Investors get direct profits in cash dividends. Bonus dividend share is allocated. According to the stock exchange, in the last one month, Tk 22,249 crore was withdrawn from the capital market. The concerned people say that large parts of this capital are invested in bank savings. Some of them are selling shares and watching the market keeping the capital.According to the latest estimates of the central bank, commercial banks are collecting deposits at a huge interest to spend liquidity crisis.
Some people are collecting deposits at 9 percent without depositing the 6 percent interest and not declaring 9 percent distribution. And the distribution of loans is 15-18 percent. According to the central bank’s March-month, 11 out of the 41 commercial banks of the country increased the rate of collection of deposits than last month. They are collecting deposits of 6 percent to 10.25 percent of the term deposits.
According to Bangladesh Bank data, 31 banks increased their average interest rates in February last month. In the previous month, 28 banks increased interest rates. And 27 banks expanded in December. In the last March, six banks have increased their interest rates. Shakeel Rizvi, president of DSE Broker’s Association (DBA), said, “Investors lose confidence in the capital market due to poor IPO and not getting the expected dividend after listing.
Meanwhile, banks are collecting deposits of interest on liquidity crisis. In this situation, investors are returning to the bank’s savings due to not getting good profits in the capital market. “Managing Director of Investment Promotion and Service Limited Mostak Ahmed Sadek said, “The interest rate on the deposit increases when there is a tight stock in the capital market. With the 10-12 percent interest deposited in the bank, the capital market is out of safe investment. Because there is some risk to invest in the stock market, which the bank does not keep. ‘