Dhaka, Bangladesh (BBN) – The central bank of Bangladesh on Tuesday extended six months to implement the revised limit of advance-deposit ratio (ADR) by banks.
Under the extended timeframe, banks, having the ADR above the re-fixed limit, are allowed to implement the revised limit of ADR by December 31 instead of June 30 earlier.
During the timeframe, if any funded loans created on the basis of commitment made on or before January 30, 2018 resulting in increase of ADR instead of gradual decrease will not be treated as violation of the instructions.
But in this cause, the ADR must also be adjusted within December 31, 2018, according to a notification, issued by the Bangladesh Bank (BB) on the day.
Earlier on January 30 last, the central bank slashed the limit of ADR to help check any possible liquidity pressure on the market due to the banks’ ‘aggressive’ lending.
The ADR is re-fixed at 83.50 per cent for all the conventional banks and at 89 per cent for the Shariah-based Islamic banks. The existing ratios are 85 per cent and 90 per cent respectively.
“We’ve extended the timeframe to facilitate the country’s overall business activities and to stabilize the ongoing interest rate movement,” a BB senior official told the BBN while explaining the main objective of the latest instructions.