Banking sector will face liquidity pressure
Without enough liquidity flow, banks will not be able to lend this fund
The banking sector will face liquidity pressure in implementing the financial package because there will be a government borrowing pressure as well.
Without enough liquidity flow, banks will not be able to lend this fund.
In that case, the government has to reduce the cash reserve requirement (CRR). Recently, the central bank reduced CRR by 50 basis points, which has returned Tk6,500 crore to banks. But India reduced CRR by 100 basis points to 3 percent.
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So we need the CRR to be reduced by 50 more basis points.
There is another risk: All affected businesses may not get this support as banks will lend on the basis of banker-customer relationship. So banks will lend by assessing the risk.
However, the government's interest subsidy is a positive thing for banks.
Rahel Ahmed is the General Secretary of ABB and Managing Director of Prime Bank
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