Despite higher returns, well-off banks in Bangladesh are steering clear of the call-money market due to a prevailing trust deficit, instead parking their surplus funds in low-yield but secure instruments like the Bangladesh Bank’s Standing Deposit Facility (SDF).

Data from March 2025 shows call-money market turnover stood at Tk 879 billion, a 10.46% increase from February. However, daily average transactions remain sluggish at Tk 46.28 billion, less than half of the Tk 80–120 billion range seen a year ago.

Officials say regulatory efforts to revitalise the interbank market—including limiting repo-backed borrowing to once a week and phasing out longer-tenure repo facilities—have not restored banks’ confidence in lending to peers.

“The trust deficit is the main issue. Even with attractive rates above 10%, many banks prefer the safety of the 8.5% SDF,” a central bank official said anonymously.

In March alone, banks deposited Tk 364 billion in the SDF, up from Tk 335 billion in February, underscoring a shift away from riskier interbank lending.

This trend worries liquidity-stressed banks that rely on short-term call loans for daily operations, asset-liability balancing, and regulatory compliance. Forced to borrow from the central bank’s more expensive Standing Liquidity Facility (SLF), they risk increasing market interest rates.

“This behaviour is distorting the money market,” said a treasury head at a private bank. “Many banks are offering over 10% on call money but still finding no takers.”

Experts warn that continued aversion to the call-money market could fuel systemic liquidity pressures and rate volatility.