The central bank has slashed the cash reserve requirement (CRR) by 50 basis points to 5.0 per cent, enabling all the scheduled banks to use over Tk 60 billion additional fund, officials said.
As per the revised rules, the banks will have to maintain 5.0 per cent CRR with the central bank from their total demand and time liabilities on a bi-weekly basis.
The banks will be allowed to maintain the reserve at 5.0 per cent instead of the existing 5.50 per cent on daily basis, but the bi-weekly average has to be 4.50 per cent in the end, according to a notification issued by the Bangladesh Bank (BB) on Monday.
The new CRR will come into effect on April 01, it said.
Besides, the central bank cut the interest rate on repurchase agreement (repo) by 25 basis points on the day, said the officials.
According to the latest decision, the existing repo interest rate of the central bank will come down to 5.75 per cent from the existing level of 6.00 per cent. The reverse repo rate, however, will remain unchanged at 4.75 per cent.
The revised interest rate on repo will come into effect on March 24, the notification said.
"We've re-fixed the CRR and repo rate with a view to keeping the money market stable through increasing money supply in the financial system," a senior BB official told the FE.
Such relaxations will help keep the domestic demand stable amid the coronavirus outbreak, he added.
Talking to the FE, another BB official said the banks would be able to use more than Tk 60 billion as loanable fund after the implementation of the revised CRR rule.
The overall money supply may increase slightly following utilisation of the additional fund, according to the central banker.
The new CRR comes after a gap of nearly two years. The central bank last reduced the ratio by 1.0 percentage point to 5.50 per cent on April 03, 2018.
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