Commercial Banks’ Borrowings from BB Repo, Window Rise to historic high Tk 1.55tn

Banks are borrowings from the Bangladesh Bank’s repo facility reached an remarkable Tk 1.55 trillion in July 2025. Which is marking the highest level ever recorded at the start of a financial year. The hit up reflects a worsening liquidity crisis in the banking sector, driven by stagnant deposit growth, rising non-performing loans (NPLs), and growing public distrust in the financial system.

As highlighted in, the latest BB data, nearly 72 per cent, or about Tk 1.11 trillion, was borrowed under the 14-day repo facility, while Tk 360 billion came from the 7-day repo and Tk 74.37 billion from the overnight facility. Borrowings under the same way stood at Tk 1.45 trillion in June, Tk 1.33 trillion in May, Tk 940 billion in April, and Tk 838 billion in March, showing a gradually upward trend in every next months.

Bankers and money market experts attribute the rising dependence on the central bank’s liquidity support to stagnating deposit growth, which fell to 7.77 per cent by June 2025 down sharply from more than 12 per cent just three years ago. However the banking sector has been facing a “trust deficit” since huge loan-related indecipherable were exposed following the the July August political uprising that toppled the Sheikh Hasina, said by senior BB official.

The exigency has been decomplexed by the increasing pressure of bad loans. The quantity of non-performing lend rise to Tk 4.20 trillion during March, nearly one-fourth of the Tk trillion 17.42 in total loans execute by the banks.

Moreover , industry insiders imposed allege that several banks are taking advantage of the facility by borrowing short-term funds from the repo window and investing them in long-term government securities to earn higher returns. This strategy, experts warn, is compressing yields on treasury bills and bonds, creating further distortions in the money market.

Due to the pressure from the International Monetary Fund (IMF), the central bank has started pressure access to repo facilities. It has decreased the debit frequency from daily operations to once a week, throw out the 28-day repo, and is reportedly preparing to phase out the 14-day repo in the coming months. A treasury head of a commercial bank admonished that if the central bank suspends the repo facility for even a couple of weeks, many banks could face collapse due to their fragile liquidity positions.

Chairman of the Policy Exchange of Bangladesh, Economist Dr. M Masrur Reaz, said that banks are possessing on an arbitrage opportunity by borrowing funds at the 10 per cent repo rate and investing them in government securities that offer returns above that level. “Banks are  making risk-free profits at a time when the overall economy remains sluggish,” he said. Dr. Reaz revealed that the central bank should review yields on treasury bills and bonds to reduce arbitrage opportunities and focus on confidence-building measures to encourage deposit growth and stabilize the financial system.