The central bank has asked the scheduled banks to comply with cash reserve ratio (CRR) and statutory liquidity ratio (SLR) rules concerning their offshore banking operations from September 01 next.
The banks are allowed to maintain the CRR and SLR only for the offshore banking operations (OBOs) using both local and foreign currencies, officials said.
Under the new mechanisms, the banks will be eligible to comply with the CRR requirement using their balance of foreign currency clearing accounts held with the central bank, particularly for the OBOs.
Besides, the banks will be allowed to maintain the SLR using their balance of nostro accounts, according to a notification, issued by the Bangladesh Bank (BB), on Monday.
A nostro account refers to an account that a bank holds in a foreign currency in another bank abroad.
Senior bankers, however, expressed concern over complying with the CRR and SLR for their OBOs saying that it would create an extra liquidity pressure on the market.
The banks, which have offshore banking operations(OBOs), need around Tk 230 billion to meet the CRR and SLR requirements.
"An extra liquidity pressure might be created if the banks were to comply with the CRR and SLR rules for OBOs," Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh (ABB), told the FE while explaining possible impact of the policy.
Mr. Rahman also managing director and chief executive officer of Dhaka Bank Limited said it would affect the credit growth particularly in the private sector in the near future.
Dismissing such a possibility, a senior BB official said: "There will be no liquidity pressure at all (because of the banks' compliance with CRR and SLR)."
The overall excess liquidity with the banks rose to Tk 856.16 billion as on June from Tk 633.68 billion three months ago, according to the central banker.
"We've allowed both local and foreign currencies to comply with the CRR and SLR for OBOs of the banks to avoid any kind of liquidity pressure on the market," he explained.
As per the policy, issued by the central bank on February 25, the banks will have to keep 13 per cent of their total liabilities as SLR and 5.50 per cent as CRR for their OBOs from September 01.
Currently 34 commercial banks out of 59 are running their offshore banking units( OBUs) from across the country and disbursed loans amounting to Tk 630 billion as of June 30 last, according the central banker.
Talking to the FE, another BB official said the central bank has brought the offshore banking operations in Bangladesh under regulations by issuing the policy.
In the past, the central bank was not empowered fully to monitor and supervise the OBU operations closely due to legal constraints, he added.
The banks earlier had run their offshore banking unit (OBU) operations as per a directive issued by the Banking Control Department of BB on December 17, 1985.
Under the directive, the OBUs had been exempted from the purview of certain provisions of the Banking Companies Ordinance 1962 as per the government notification.
Besides, the OBUs were considered for exemption from Article 36(1) of the Bangladesh Bank Order 1972 on such terms and for such period as may be deemed fit by the government.
It means the OBUs were exempted for maintaining CRR and SLR with the central bank of Bangladesh against their liabilities.
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