BB increases foreign currency deposit rate for non-residents

The Bangladesh Bank for the first time has set the interest rate ceiling for non-resident foreign currency deposit (NFCD) accounts with a great increase, in a bid to boost the inflow of foreign currencies to the country.

From now on, the interest rate on 1 to 3-year term deposits of the NFCD account holders will be 2.25% plus the benchmark reference rate – which is currently 1.75% – while it will be 3.25% plus the benchmark reference rate on the 3 to 5-year term deposits.

The central bank on Monday issued a circular in this regard.

"To bring uniformity, it has been decided to set annual interest rate ceilings along with the benchmark reference rate in the relevant currency of deposits," the circular reads.

A reference rate is an interest rate benchmark used to set other interest rates. Prior to this policy, the Bangladesh Bank used to pay interests to the NFCD account holders as per Euro Currency Deposit Rate only.

Earlier on 17 July, the central bank allowed banks across the country to raise fresh deposits through NFDC accounts without any reference to the euro currency interest rate.

The development came as part of the central bank's move to increase dollar inflow amid the depleting forex reserves.

Due to the country's foreign exchange crisis, the price of the dollar is increasing uncontrollably. Now the banks of the country are not getting dollars below Tk100 for imports.

Businesspeople are also optimistic that the new move will help increase foreign currency deposits.