BB eases daily cash reserve ratio requirements to improve banks’ liquidity
The central bank has eased the daily Cash Reserve Ratio (CRR) requirement for commercial banks to help manage their liquidity.
In a circular issued today, the Monetary Policy Department of Bangladesh Bank announced that banks are now required to maintain a CRR of 3% daily, down from the previous 3.5%.
The CRR is the percentage of a bank's total demand and term liabilities that must be kept in reserve with the central bank.
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In the circular, the central bank stated that this directive aims to enhance the monetary policy framework and further strengthen liquidity management.
Although the daily CRR requirement has been relaxed, banks must still maintain the bi-weekly average CRR at 4%, as before.
Previously, on 15 April 2020, in response to the COVID-19 outbreak, the Bangladesh Bank reduced the bi-weekly average CRR from 5% to 4% and the daily CRR from 4.5% to 3.5%.
Senior officials from several banks told TBS that the central bank's new policy will improve the liquidity situation for banks, particularly weaker ones struggling to maintain daily CRR.
