Dhaka, Bangladesh (BBN) - The central bank of Bangladesh has raised the net open position (NOP) limit of commercial banks for holding foreign exchange in order to keep the inter-bank foreign exchange (forex) market stable.
The Bangladesh Bank (BB), the country’s central bank, has increased the NOP by more than 11 per cent to US$1.51 billion from $1.36 billion earlier of all 56 scheduled banks, officials said.
The new NOP has been determined on the basis of 15 per cent of the total regulatory capital of the banks as on March 31, 2015, they added.
Under the revised directives, the NOP limit of ICB Islamic Bank, Bangladesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB) will remain unchanged while such limit for BASIC Bank Limited and Bangladesh Commerce Bank Limited (BCBL) has been decreased.
The NOP limit for BASIC Bank came down to US$5.0 million from $8.0 million earlier while the BCBL’s limit re-fixed at around 4.0 million from $6.0 million earlier.
“We’ve decreased the NOP limit for two banks due to their lower capital base,” a BB official explained.
He also said the NOP for new nine banks has re-fixed at $8.0 million from $5.0 million earlier in line with their capital position.
“We’ve already informed the revised NOP limit to the banks and asked them to maintain the new NOP limit for holding foreign exchange,” the central banker noted.
The banks are now empowered to retain more foreign exchange that helps minimizing sale pressure of the US dollar in the inter-bank foreign exchange (forex) market, the BB official added.
The central bank has taken the latest move against the backdrop of increased flow of foreign exchange in the market as well as capital base of the banks because of lower import payment obligations in the recent months.
Talking to BBN, another BB official said the higher growth of inward remittance and steady growth of export earnings have also boosted the supply of the greenback in the local forex market recently.
BBN/SSR/AD