Commercial banks have continued to borrow from the Bangladesh Bank to meet their liquidity shortages despite a hike in the policy rate.

In an auction on Monday, 38 banks and two non-bank financial institutions (NBFIs) took Tk 15,120 crore from the central bank through the repo and the liquidity support facilities.

Banks have been availing liquidity support from the central bank every working day for the last couple of months amidst tight liquidity in the banking sector, said a senior central bank official.

Around half of the 61 banks in Bangladesh borrowed around Tk 15,000 crore from the central bank on Tuesday.

The foreign exchange crisis, high inflation, the growing interest rates of government Treasury bills and policy rate hikes have created a tight liquidity situation in the overall banking sector, said industry insiders.

However, most banks nowadays are taking liquidity support from the central bank and investing in Treasury bills as the latter's yield has reached 11 percent.

"The interest rates of deposit products have gone up after the withdrawal of the lending rate cap which also pushed banks to collect funds from the central bank," said a banker.

During Monday's auction, three banks took Tk 202.70 crore through the one-day repo facility while 20 banks and two NBFIs borrowed Tk 7,550 crore through the 7-day repo facility.

Moreover, 12 banks took Tk 6,882 crore through the one-day liquidity support facility while three Islamic banks secured Tk 485 crore through the 14-day Islamic bank liquidity facility.

The interest rates were 7.75 percent, 7.85 percent, 7.75 percent, and 7 percent to 8.50 percent, respectively.

On November 26, the central bank raised the repo rate by 50 basis points to 7.75 percent to step up its fight against persistent high inflation.

Mirza Elias Uddin Ahmed, managing director of Jamuna Bank, recently told The Daily Star that the central bank made money costlier by hiking the policy rate with the aim of curbing inflation.

Some Shariah-based banks are facing a liquidity shortage whereas there is no liquidity shortage in some banks and this mismatch has created pressure in the market, he said.

Not only the central bank, banks are also reaching out to the call money market to borrow funds.

Yesterday the average overnight call money rate stood at 8.57 percent, which was around 6 percent a few months back. The rate for 14 days was 9.28 percent.