Bangladesh Bank has increased interest rates to control inflation, leading to a slowdown in private investment as businesses avoid borrowing at higher costs. Following the removal of the interest rate cap, deposits have surged in financially strong banks, while weaker banks struggle with liquidity shortages. As of March, excess liquidity in the banking sector reached Tk 3.78 trillion, up 58.31 percent from a year earlier.

Bank officials said the fall of the Awami League government exposed the financial health of banks, prompting depositors to move funds to stronger institutions. This shift has created a liquidity imbalance, with some banks holding idle funds while others face shortages. The overall liquidity stood at Tk 7.02 trillion in March, exceeding the required Tk 3.16 trillion.

To utilize idle funds, Bangladesh Bank announced a Tk 610 billion stimulus package, including Tk 410 billion from banks’ own funds and Tk 190 billion from refinancing. The package targets industrial, SME, agricultural, and export diversification sectors, aiming to create over 1.6 million jobs with loans offered at 7 percent interest, significantly below prevailing market rates.