Transactions in Bangladesh’s call money market have picked up sharply following a central bank move to cut the rate on its standing deposit facility (SDF), signalling renewed activity in the once-sluggish interbank platform.

Bangladesh Bank reduced the SDF rate by 50 basis points to 8 percent in July, discouraging banks from parking surplus funds in the low-yielding facility. In contrast, the call money market, where rates hover around 10 percent, has since seen a surge in activity.

Data from the central bank show interbank spot transactions rose to Tk 1.16 trillion in both July and August, compared with Tk 888 billion in June. At the same time, SDF usage dropped sharply to Tk 261 billion in July and Tk 267 billion in August, down from Tk 727 billion in June.

Market participants say the shift has been reinforced by Bangladesh Bank’s ongoing dollar purchases from commercial banks, which inject additional taka liquidity into the system. The move, intended to stabilise the exchange rate, has encouraged lenders to redirect funds into the interbank market amid continued economic sluggishness.

Dr Md Ezazul Islam, Executive Director (Grade-1) of Bangladesh Bank, said the measures are part of efforts to modernise the monetary policy framework and streamline liquidity. “The call money market is now starting to vibrate, and the policy adjustment is paying off,” he noted.

The call money market serves as a critical mechanism for banks to address short-term funding needs, including reserve requirements and liquidity mismatches.