Govt brings down CRR to 5.5%

Finance Minister AMA Muhith today announced to slash the cash reserve requirement (CRR) by one percentage points to 5.5 percent to mitigate the ongoing liquidity crisis in the banks.

Muhith made the disclosure after a meeting with banks’ directors, Bangladesh Bank Governor and Association of Bankers Bangladesh at Hotel Pan Pacific Sonargaon in the capital.

The finance minister said the move would help banks address their liquidity crisis immediately and it won’t create any inflationary pressure. Lending rates will also come down to single digit, he said.

At the meeting, the owners demanded that CRR be brought down to 3 percent from the existing 6.5 percent.

CRR is a cash reserve ratio, which a bank has to keep in its current account with the Bangladesh Bank against deposits.

The government on March 30 decided to allow state agencies to deposit 50 percent of their funds with private banks, up from the existing ceiling of 25 percent, to tackle liquidity crisis.

Private bank owners Nazrul Islam Mazumder, Salman F Rahman, HBM Iqbal, Nurul Fazal Bulbul and others were present during the meeting.

Meanwhile, the minister attended the annual conference of Janata Bank as chief guest at the ballroom of the hotel where he said the interest rates on bank deposits will come down to single digit within a month.