BB asks banks to maintain CRR, SLR separately

The Bangladesh Bank (BB) Tuesday asked the commercial banks to maintain cash reserve requirement (CRR) and statutory liquidity ratio (SLR) separately, keeping their existing requirements unchanged, officials said.
Under the new rules, excess over CRR will be added to the SLR.
The new rules will come into effect from February 1, 2014, the central bank said in a directive, issued Tuesday.
The conventional banks will have to maintain SLR at minimum 13 per cent with the Bangladesh Bank (BB) while the Shariah-based Islamic banks must maintain minimum 5.50 per cent SLR with the central bank, according to the directive.  
Currently, both the conventional and Islamic banks are maintaining SLR at 19 per cent and 11.50 per cent respectively including the CRR with BB.
The banks are now allowed to maintain the CRR at 5.50 per cent on daily basis, but the bi-weekly average has to be 6.0 per cent, according to the existing rules.
 "We've separated the CRR from the SLR in line with the Bank Company (Amended) Act 2013," Abu Hena Mohammad Razee Hassan, deputy governor of the BB, told the FE Tuesday.
He also said such separation would help implement monetary policy effectively.
Currently, the banks maintain the CRR in local currency only.
The day-end balance of the account maintained with the central bank in the Bangladesh Taka (BDT) is considered as the CRR.
The conventional 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 19 per cent as fixed by the central bank earlier.
Three specialised banks continue to remain exempt from maintaining the SLR.
However, the Islamic banks and financial institutions may now meet their SLR through Islamic bonds as per Islamic Bond Regulation 2004.
Islamic financing commenced in Bangladesh in early 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.