BB opens account for use of excess funds

The central bank has opened an account for introducing a refinancing scheme exclusively for Sharia-based banks and non-banking financial institutions (NBFIs) to utilise a glut of around Tk 25 billion lying with them in excess funds.
Officials said under the new scheme, eight Islamic banks and two NBFIs are entitled to invest their excess funds on a three-month renewable basis after meeting the central bank's requirements.  
All Sharia-based banks and non-banks currently hold around Tk 25 billion in excess liquidity after maintaining cash reserve requirement (CRR) and statutory liquidity ratio (SLR) separately with the central bank.
"We want to utilise the excess funds through introducing the refinancing scheme to facilitate agro-processors, small enterprises, renewable energy and environment-friendly initiatives," a senior official of the Bangladesh Bank (BB) told the FE Sunday.
He also said, "We expect that the scheme will be a new window for investment by the Islamic banks and NBFIs."
The lending rate will be same as the Mudaraba savings account rate of the lenders or 5.0 per cent, or which one is lower, according to the central bank circular.
Sharia-based banks and NBFIs will have to repay the central bank the principal amount of the loans and the profits on that after every three months.
Managing Director and Chief Executive Officer of the Islami Bank Bangladesh Limited (IBBL), Mohammad Abdul Mannan, welcomed the BB's latest move.
It will facilitate Islamic banking activities in Bangladesh, he said.
Mr. Mannan, also Task Committee Chairman of the Islamic Banks Consultative Forum (IBCF), said such excess funds will be used for the country's overall development under the scheme.
"Both Islamic banks and NBFIs will be benefited from the introduction of such refinancing scheme," he said.
All CEOs of Islamic banks are members of the Task Committee of the IBCF.