Written by The Banking Post
In a major policy shift, Bangladesh Bank (BB) has reduced the interest rate on its Standing Deposit Facility (SDF) by 50 basis points—from 8.50% to 8.00%—in a bid to revive activity in the call money market.
The Monetary Policy Department of the central bank issued a circular on Monday stating that the revised SDF rate will take effect from July 16, 2025.
Explaining the decision, BB Executive Director (Grade-1) Dr Md Ezazul Islam said the move is intended to discourage commercial banks from overusing the SDF for parking excess funds and instead boost interbank lending through the call money market.
The policy move follows a report published by The Financial Express titled “Call Money Market Falters Amid Trust Deficit, Healthy Banks Park Surplus Credits in SDF Despite Low Returns.” The report highlighted the growing reliance on the SDF despite its lower returns, with banks depositing Tk 727.30 billion in the SDF in June—an increase of 158% from Tk 282.22 billion in May.
In contrast, transactions in the call money market dropped by 15% month-on-month to Tk 887.90 billion in June 2025, down from Tk 1.04 trillion in May.
