Banks free to fix interest rate on RFCD A/Cs

Commercial banks are now free to fix the interest rate on savings in the Resident Foreign Currency Deposit (RFCD) accounts.

They can, from now on, set the rates based on bank-customer relationship or the market instead of following the Secured Overnight Financing Rate (SOFR), according to a Bangladesh Bank (BB) circular issued on Thursday.

All authorised dealer branches of scheduled banks have been instructed to follow the new directives with “immediate effect”, it says.

A RFCD account is a savings account that allows Bangladeshi residents to manage and access foreign currency.

Currently, banks set the rate with an additional 1.5-per-cent interest on deposits in these accounts based on international benchmark SOFR.

Seeking anonymity, a BB official said the SOFR rate is now 4.82 per cent.

With adding a maximum 1.5 per cent, the interest rate for RFCD is 6.32 per cent, which is too costly for the banks.

Considering the pain of the banks, the official said, the central bank made the decision giving absolute liberty to the lenders to fix the interest rate for RFCD accounts on bank-customer relationship.

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