Dhaka, Bangladesh (BBN)– Bangladesh Bank (BB) has relaxed regulations allowing banks to pay interest on resident foreign currency deposit (RFCD) accounts at Eurocurrency deposit rates to encourage deposit in the accounts.
The central bank of Bangladesh issued a circular in this connection on Tuesday and asked all authorised dealers in foreign exchange in Bangladesh to follow the latest instructions relating to pay interest on RFCD accounts.
“….it has now been decided that authorised dealers may apply interest on the balances of the RFCD accounts at Eurocurrency deposit rates,” the BB said in its circular.
Talking to the BBN, a BB senior said the central bank has relaxed its regulations aiming to increase the inflow of cash US dollar through proving market-based interest rates on the deposit of RFCD accounts.
He also said the central bank took the latest measures in line with the Association of Bankers, Bangladesh (ABB) recommendations.
Earlier, the rate of interest on the balances of RFCD account was fixed at one quarter percent (0.25 per cent) less than the rate at which interest is paid on balances of bank in their foreign currency clearing accounts maintained with the BB.
Eurocurrency is currency held on deposit outside its home market, i.e., held in banks located outside of the country which issues the currency.
For example, a US dollar denominated deposit in a Singapore bank is Eurocurrency, or more specifically Eurodollar deposit.
Eurocurrency does not have to involve either the euro currency or the eurozone.