The Bangladesh Bank (BB) yesterday removed the cap on interest rates for Resident Foreign Currency Deposit (RFCD) accounts, allowing banks to set their own rates.

RFCDs are savings accounts that Bangladeshi residents can open and maintain with foreign currency brought in from travel abroad.

Previously, banks were required to pay an additional 1.5 percent interest on deposits in these accounts, based on the international benchmark Secured Overnight Financing Rate (SOFR).

With the current SOFR at 5.3 percent, banks have been paying 6.8 percent interest on RFCD accounts.

Now, banks will have the flexibility to determine their own interest rates or profit margins on these accounts, according to the central bank notification yesterday.

Any amount of foreign currency declared to customs authorities and up to $5,000 brought in without declaration can be deposited into RFCD accounts.

However, proceeds from exports of goods or services from Bangladesh, or commissions from business deals within the country, cannot be credited to these accounts.