# Interest on treasury bills was 3.19 pc in Dec 2021
# It doubled to 6.44 pc in June 2022
# It jumped to 11.09 pc in December 2023
The banking sector was struggling due to the liquidity crisis and the government to provide additional loans as per the demand. In the meantime, the central bank kept the interest rate of treasury bills under various strategies. But on the advice of the IMF, the monetary policy had to be used to rein in high inflation, raising interest rates on loans. Then the interest rate of six-month treasury bills increased at the speed of the storm.
It was known that its interest has increased more than three and a half times in the last two years. Along with this, the interest rate of other loans has also increased. At the same time, interest rates on other bill bonds have also increased.
As a result, the race to increase interest in the bank sector is going on. Borrowers have suffered losses. The central bank acknowledged this and gave limited concessions in installments for them. However, the concerned people fear that there will be no benefit in this.
As a condition of a $4.7 billion loan from the International Monetary Fund (IMF), the agency suggested Bangladesh use monetary policy to control the rise in inflation. The central bank has been following a contractionary monetary policy since the financial year 2022-23 to control inflation. But at that time, the central bank's policy-making interest rate did not increase much in the market without increasing the interest rate. Except for credit cards and consumer loans, the maximum interest rate on loans is capped at 9 percent. Inflation did not decrease, on the contrary, it increased. Along with this, the interest rate of other loans is also increasing.
According to Bangladesh Bank reports, the interest rate on six-month treasury bills was 3.19 percent in December 2021. It dropped slightly to 3.05 percent in March 2022. Then in June, it doubled to 6.44 percent. At that time, the demand for government loans from the sale of treasury bills also increased. At the same time, there was a liquidity crisis in the bank. As a result, interest rates have almost doubled. In September of the same year, it decreased slightly to 5.47 percent. In December of that year, it rose again to 7.30 percent. It fell slightly to 7.01 percent in March 2023. It rose again to 7.07 percent in June and further to 7.40 percent in September. In December, it jumped to 11.09 percent.
Meanwhile, liquidity in banks is decreasing. In June 2021, liquidity was Tk 4,46,000 crore. Now it has come down to Tk 4 lakh 24 thousand crore. In the meantime, the government is borrowing more. In the last fiscal year, the government borrowed Tk 97,000 crore from the central bank. This has increased the rate of inflation. In the current financial year, they are taking loans from commercial banks instead of taking loans from the central bank. This has increased the liquidity crisis in commercial banks. In December 2021, the government's six-month treasury bill debt stood at Tk 13,870 crore. It increased to Tk 18,000 crore in December 2022. In March 2023, it was another Tk 29,200 crore. It further increased to Tk 41,280 crore in June. In September, it further increased to Tk 41,830 crore. In December, it again dropped to Tk 28,010 crore. Still, debt has more than doubled.
The government has four treasury bills and five bonds in the market. These are treasury bills of 14, 91, 182 and 364 days. The bonds include treasury bonds of 2, 5, 10, 15 and 20 years. Interest rates have all gone up. However, the interest on six-month treasury bills has increased the most, which is more than three and a half times. Interest rates for others have more than doubled.
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