Forex reserve limit of banks raised

Bangladesh Bank has raised the limit of foreign currency that banks can hold.
Commercial banks can now keep up to US$ 1.5 billion, up from the previous limit of 1.13 billion. The provision will be effective from July 1, the first day of the financial calendar, according to a news agency.
The central bank sent relevant directives to executives of 56 banks Monday.
According to the regulations, a bank can maintain up to 15 per cent of its capital in foreign currencies. Since the capital varies time to time, the Bangladesh Bank sets the limit for individual banks.
The Bangladesh Bank procures foreign currency held by a bank in excess of the set limit.
According to central bank officials, the decision was prompted by a spurt in the supply of US dollars in the local market.
The commercial banks, however, feel otherwise. They say the decision will not yield any benefit as the banks hold excess foreign currency at the moment and that it would create a pressure on them.
Banks were collectively allowed to maintain foreign currencies worth US$ 810 million up to Dec, 2012. The limit was raised to US$ 1.13 billion in April last year, and again to 1.52 billion now.