Siddique Islam The central bank has moved to ensure commercial banks' maintenance of the cash reserve requirement (CRR) and the statutory liquidity ratio (SLR) separately aiming to facilitate effective implementation of its monetary policy, officials have said. The Bangladesh Bank (BB) will issue a directive in this connection shortly asking the banks to maintain the CRR and the SLR separately in a new prescribed format. "We're working on the issue," Mr Abu Hena Mohammad Razee Hassan, deputy governor of the BB, told the FE Thursday. He also said the central bank would issue the directive under the Bank Company (Amended) Act 2013. The law empowers the central bank to do the needful for maintenance of the CRR and SLR separately, according to the BB officials. Currently the conventional banks are maintaining with the BB the SLR at 19 per cent, including the CRR. The banks are also allowed to maintain the CRR at 5.50 per cent on the daily basis, but the bi-weekly average has to be 6.0 per cent, according to the existing rules. Currently the banks maintain the CRR in the local currency only. The day-end balance of the account maintained with the central bank in the Bangladesh Taka (BDT) is considered the CRR. On the other hand, the Shariah-based Islamic banks maintain 11.50 per cent SLR including the CRR, as they cannot purchase any bonds and government-approved securities that involve receipt of interest. However, the Islamic banks and financial institutions may now meet their SLR through Islamic bonds as per the Islamic Bond Regulation 2004. Islamic finance commenced in Bangladesh in early nineteen eighties with just one Islamic commercial bank. By now there are eight Islamic banks being run wholly based on Shariah principles. Besides, as many as 17 conventional banks, including one globally active foreign bank, are running Islamic banking branches or windows alongside their conventional banking, according to the BB officials. The banks are allowed to maintain the SLR in the form of assets in cash or gold or in the form of un-encumbered approved securities, the market value of which shall not be less than the 19 per cent fixed by the BB. Three specialised banks have continued to remain exempt from maintaining the SLR.
BB to ask banks to maintain CRR, SLR separately
FE Team | Published: October 25, 2013 00:00:00 | Updated: February 01, 2018 00:00:00
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