BB reduces CRR by 0.5pc to support liquidity and monetary policy

Bangladesh Bank has reduced the daily cash deposit CRR rate of all scheduled banks at 0.5 percent. As a result, the daily deposit rate has been reduced from 4 percent to 3.5 percent.

This will also apply to Islamic Shariah banks. The bi-weekly average deposit rate will remain unchanged at 4 percent. Bangladesh Bank said that this decision has been taken with the aim of bringing greater excellence in the monetary policy framework and further strengthening liquidity management. On Tuesday, a letter in this regard was issued by the Monitoring Policy Department (MPD Department). Bangladesh Bank has issued a notification in this regard in accordance with Bangladesh Bank Order 1972, i.e. President's Order 127 of 1972.

Economist and former banker Mamun Rashid feels that the central bank’s decision to reduce the CRR will be somewhat helpful for monetary policy, if not on a large scale. It will increase the opportunity of some money to go to the market. This decision can be said to be going in a positive direction. He told View Bangladesh that weak banks are drowning in bad loans. Many banks do not have money. However, this rate of redetermination of CRRA on banks will be helpful if the liquidity crunch is not severe.