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Bangladesh Central Bank Cuts Standing Deposit Facility Rate Amid Call-Money Market Struggles

Strategic Insights

— 2 min read

In a move aimed at revitalizing the faltering call-money market, the Monetary Policy Department (MPD) of the Bangladesh Bank (BB) has cut the standing deposit facility (SDF) rate by 50 basis points to 8.0 per cent. The policy change, effective from July 16, 2025, aims to discourage the growing use of SDF instruments by commercial banks with surplus funds and make the call-money market more vibrant. However, the policy rate and standing liquidity facility (SLF) remain unchanged at 10 per cent and 11.50 per cent, respectively.

Key Takeaways:

  • The Bangladesh Bank has reduced the standing deposit facility (SDF) rate by 50 basis points to 8.0 per cent to revitalize the call-money market.
  • The move aims to discourage the use of SDF instruments by commercial banks with surplus funds and make the call-money market more vibrant.
  • Despite the rate cut, the policy rate and standing liquidity facility remain unchanged at 10 per cent and 11.50 per cent, respectively.
  • In June 2025, affluent banks piled up Tk 727.30 billion in the SDF, a 158-per cent increase from the previous month's count of Tk 282.22 billion.
  • The call-money market transacted Tk 887.90 billion in June 2025, a 15-per cent decline from the May figure of Tk 1.04 trillion.
  • A BB official says well-off commercial banks, including foreign ones, used the state-guaranteed deposit instrument of the central bank most because the call-money market is an interbank platform where collateral is not required.
  • Bankers and money-market analysts argue that the move will not contribute significantly to reviving the call-money market due to prevailing interbank trust deficit issues.
  • Chief Executive Officer of Standard Chartered Bank Bangladesh, Naser Ezaz Bijoy, believes the decision will have a limited impact on the profitability of foreign banks due to their small presence in the banking ecosystem.
  • Managing Director and Chief Executive Officer of Mutual Trust Bank (MTB), Syed Mahbubur Rahman, thinks there is little option for banks to use surplus credits under the current macroeconomic situation.
  • A treasury head of a state-owned commercial bank opines that injecting vibrancy in the faltering call-money market will not be possible solely through cutting the SDF rate by 50 basis points.

Statistics:

  • Tk 727.30 billion accumulated in SDF in June 2025, a 158-per cent increase from Tk 282.22 billion in the previous month.
  • Tk 887.90 billion transacted on the call-money market in June 2025, a 15-per cent decline from Tk 1.04 trillion in May.
  • 50 basis points reduction in SDF rate to 8.0 per cent.
  • 10.35 per cent weighted average rate (WAR) on the call-money market in June 2025.

Sources:

  • "Call money market falters amid trust deficit/ Healthy banks park surplus credits in SDF despite low returns" by The Financial Express
  • Bangladesh Bank (BB) Circular, issued on Tuesday

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