Dhaka, Sept 6 (UNB) - Despite a huge demand for money disbursement in banks ahead of Eid festival, the country’s call money market remained stable.

According to sources, the interest rate on the lending of the banks went up as much as 8 per cent on Monday.

“We borrowed about Tk 300 crore from another bank at a rate of 5.5 percent,” a senior official at the state-owned Janata Bank told UNB. He said they borrowed the money from the inter-bank money market.

The bank official said that the interest rate on the lending might go up maximum to a level of 10 percent as the money market remains stable.

Normally, every year ahead of Eid festival, the country’s call money market becomes a little bit volatile when the banks face excessive liquidity disbursement demand from their clients.

To meet the demand banks rush to the inter-bank call money market to collect their required cash.

Under this inter-bank market, banks borrow from other banks instantly for a temporary period of few days to meet the exigency.

However, officials said in most cases, the call money market becomes unstable just ahead of the Eid-ul-Azha, which is known as festival of animal sacrifice.

At that time, the leather traders rush to the banks to borrow huge money to invest in the business of leather purchase and sales.

Officials at different banks believed that the call money market this year remained stable because of two reasons. First, most of the banks have excessive liquidity under the cover of idle money. Secondly, Bangladesh bank has been regularly conducting security auctions under the term of repo and reverse repo.

Through this system, the central bank keeps controls on the money circulation in the market.