BB eases rules to attract dollar deposits

FE Report | Published: July 25, 2018 10:28:20 | Updated: July 29, 2018 13:13:17


FE file photo

The central bank has relaxed regulations, allowing banks to pay interest on resident foreign currency deposit (RFCD) accounts at Eurocurrency rates to encourage savings in such accounts.

Eurocurrency is a kind of currency held in banks located outside the country that issues it.

For example, a US dollar denominated deposits in a Singaporean bank is known as Eurocurrency, or more specifically Eurodollar deposit.

"We've relaxed our regulations to increase the inflow of cash US dollar through providing market-based interest rates on the deposit of foreign currency accounts," a senior official of the Bangladesh Bank (BB) told the FE.

He also said that the central bank took the latest measures in line with the recommendations of the Association of Bankers, Bangladesh (ABB).

The central bank issued a circular in this connection on Tuesday and asked all authorised dealers in foreign exchange in Bangladesh to follow the latest instruction related to pay interest on RFCD accounts.

"….it has now been decided that authorised dealers may apply interest to the balance of the RFCD accounts at Eurocurrency deposit rates," the BB said in its circular.

Talking to the FE, Syed Mahbubur Rahman, chairman of the ABB, said it will help attract more foreign currency deposits in local banks.

Eurocurrency is not related to either the euro currency or the eurozone.

Earlier, the rate of interest on the balances of RFCD account was fixed at one quarter per cent (0.25 per cent) less than the rate at which interest is paid on balances of bank in their foreign currency clearing accounts maintained with the BB.

siddique.islam@gmail.com

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