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The central bank has asked the banks to submit their specific action plans to its department concerned by April 30 to help bring down the advance-deposit ratio (ADR) limit at required level, officials said.
The banks, having the ADR above re-fixed limit, will have to submit monthly progress reports to the Department of Off-site Supervision (DOS) within 10 working days each month, according to a notification issued by the Bangladesh Bank (BB) on Monday.
"We'll monitor the progress reports regularly to know about the ADR trend in the banks concerned," a BB senior official told the FE while explaining the objective of the notification.
He also said the banks will have to implement the asset-liability management (ALM) guidelines strictly to manage their liquidity risk properly.
As per the notification, the banks having over ADR limit will have to avoid sanctioning fresh loans without complying with other prime indicators of the ALM guidelines.
The prime indicators include liquidity coverage ratio (LCR), net stable funding ratio (NSFR) and wholesale borrowing limit, commitment limit and swapped fund limit funding, according to the central banker.
"Actually, all scheduled banks will have to comply with all key indicators under the ALM guidelines before sanctioning any fresh loans," the central banker noted.
Besides, the central bank extended the deadline by three more months to implement the revised limit of ADR by the banks.
Under the extended timeframe, the banks having ADR above re-fixed limit are allowed to implement the revised limit of ADR by March 31, 2019 instead of December 31, 2018.
The decision was taken at a tripartite meeting among the Ministry of Finance, BB and Bangladesh Association of Banks (BAB) in the city on April 01 to mitigate the present liquidity crunch in the banking system.
Earlier on January 30, the central bank of Bangladesh slashed ADR limit to help check any possible liquidity pressure on the market due to the banks' 'aggressive' lending.
The ADR is re-fixed at 83.50 per cent for all the conventional banks and at 89 per cent for the Shariah-based Islami banks. The existing ratios are 85 per cent and 90 per cent respectively.
On February 20, the BB extended the timeframe for the first time by six months to December next for the banks to meet their revised ADR.
Under the extended timeframe, the banks having ADR above re-fixed limit are allowed to implement the revised limit of ADR by December 31 instead of June 30 earlier.
Meanwhile, the ADR of all banks rose to 75.88 per cent as of December 31 last year from 71.85 per cent in the previous year.
The ADR of six state-owned commercial banks (SoCBs) stood at 54.56 per cent as of December 31, 2017 from 51.19 per cent a year ago.
All private commercial banks' ADR was, on average, 84.68 per cent as of December 31 last against 81.25 per cent on the same day of the previous calendar year while the ADR of nine foreign commercial banks stood at 69.73 per cent from 60.54 per cent.
However, the ADR of two specialized banks came down to 77.27 per cent during the period under review from 78.52 per cent, according to the BB's confidential report.